When it comes to selecting the most appropriate structure for your business or investment, we always recommend you ‘start with the end in mind’. Australian tax laws are complex and changing your business structure at some point in the future can trigger a capital gains tax event that could prove costly.
There are a few things to consider when choosing the best structure to suit your circumstances:
- Minimisation of Income Tax
- Maximise Asset Protection
- Allow for the admission of New Business Partners or Investors
- Comply with all Legal Requirements in your Industry
- Future entitlement to Discount Capital Gains Tax Concessions
When choosing the right structure, you need to consider the profit of the business, the current tax position of all stakeholders and the risk profile of the industry. In some cases, you might also need to consider if it will be easier to do business in your industry as a sole trader or company or trust.
When it comes to structures there are a range of options. The most common structures in Australia include Sole trader, Partnership, Company and Trust (Discretionary (Family), Unit or Fixed).
Each type of business/investment structure has its own set of rules & regulations and impact on important issues like asset protection, tax rates, availability of discount capital gains concessions and treatment of carry forward tax losses.