Transcript Ward Keller Lawyers

Demystifying Business Structures:
Companies, Trusts
and Sole Traders
16 February 2012
Leon Loganathan
Partner
Darwin
Palmerston
Casuarina
Parap
Alice Springs
Gove
Business Structures – Sole Trader

What is a sole trader



Individual
No separate tax return
Why operate as a sole trader




Size
Reporting requirements
Tax
Application of 50% CGT general discount


Ability to offset losses against other income
Disadvantages

Darwin
No asset protection
Palmerston
Casuarina
Parap
Alice Springs
Gove
Business Structures – Company

What is a company



Why use a company



Separate legal entity
Constitution/Shareholders/Directors
Asset protection
Tax benefits
Disadvantages



Darwin
Administration and reporting requirements - ASIC
Treatment of losses
Capital Gains Tax 50% general discount does not apply
Palmerston
Casuarina
Parap
Alice Springs
Gove
Business Structures – Trusts

What is a trust


Types of trusts



Trust deed - Settlor/Appointor/Trustee/Beneficiaries
Unit Trust
Discretionary Trust
Why use a trust


Asset Protection
Tax benefits



Darwin
Flow through of income to beneficiaries
Flexibility in distributing income
Availability of 50% CGT general discount
Palmerston
Casuarina
Parap
Alice Springs
Gove
Business Structures – Trusts

Disadvantages




Darwin
Administration and reporting requirements - ASIC
Income must be distributed – can’t be retained like a company
Treatment of losses – they remain in the trust and can’t be offset
against income of beneficiaries
ATO is continually tightening policy around the use of trusts and
eroding the benefits
Palmerston
Casuarina
Parap
Alice Springs
Gove
Transferring Assets - Restructuring

Stamp Duty


Capital Gains Tax


Are there any exemptions
Is there any rollover relief
Documentation

Darwin
Legal and taxation requirements
Palmerston
Casuarina
Parap
Alice Springs
Gove
Thank You
Darwin
Palmerston
Casuarina
Parap
Alice Springs
Gove