Today I want to focus on Tax Structuring. It’s a topic I really believe is the most important tax decision business owners and investors make and it’s something everyone needs to get right.
“I’m looking to start a business, what structure should I have?”
Between Income tax, Capital gains tax, GST and stamp duty, the cost of getting this wrong can be HUGE!
This blog can’t cover all the areas of tax structuring, but what I want to do is cover some really important points to get you started:
- These day’s (with a litigious culture) there aren’t many businesses that fit in a sole trader structure (basically a personal ABN and maybe a business name). Start as a sole trader and see if the business can support your income, but once the business gets going then get your structure right;
- Kids are cute and expensive, with a Family Trust kids of any age can get tax free income. They can’t get a lot if they are under 18, but it all helps keep the money in your pocket;
- Having a Company somewhere in the structure (usually as the trustee of a trust) provides asset protection. That’s really important. Don’t let a disgruntled creditor risk your personal assets;
- Companies alone aren’t a great business or investment structure. CGT, tax treatment, complexity of accounting and stamp duty all have some real traps with companies;
- For businesses or investments with 2 or more individuals or families, partnerships are a start, Unit trusts can work and there are some real benefits in getting your accountant to explore hybrid trusts.
Getting your tax structuring right provides huge tax benefits (both Capital gains tax and income tax), asset protection and even improve your chances getting bank finance!!
With Paul Hogan in the news today I want to share one of my favourite tax quotes: In the words of the late Kerry Packer:
“I am not evading tax in any way, shape or form. Now of course I am minimizing my tax and if anybody in this country doesn’t minimize their tax they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra.”
Paul Meissner – Director