From the Institute of Chartered Accountants

Many factors need to be considered when deciding what structure to adopt – income tax, capital gains tax, GST and stamp duty, to name a few. Making the wrong decision can become a costly mistake.

While this article cannot cover all the areas of tax structuring, there are some important points to consider as a starting point:

• In today’s litigious environment there are not many businesses that suit a sole trader structure for the long term. Being a sole trader includes basically a personal ABN and, in some instances, a business name. While many may start as a sole trader, this structure needs to be reconsidered once the business is established and generating an ongoing income.
• Family Trusts allow children of any age, to receive tax free income. The amount of income children under the age of 18 can receive is limited, but it all helps keep to the money in your pocket.
• Having a company somewhere in the structure (usually as the trustee of a trust) provides asset protection – an important feature protecting your personal assets from creditors.
• Forming a company is not necessarily a great business or investment structure. CGT, tax treatment, complexity of accounting and stamp duty all have some real traps for companies.
• For businesses or investments with two or more individuals or families, partnerships should be considered. Unit trusts are also effective, as are hybrid trusts.

It is worth meeting with us to explore these options.

Getting your tax structuring right provides huge tax benefits (both in terms of capital gains tax and income tax), asset protection and can even improve your chances of getting bank finance.

Contact us for more information to determine what will work best for you and your business.