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To be a Director or Not to Be ? That is the Question – by Will Hawney – Queensland Administration Services

It was not that long ago that being a Director of a Corporation had many more benefits (not the least being additional tax benefit) than just being in a Partnership or operating as a Sole Trader.

These benefits are becoming dramatically reduced specifically with respect to protection offered to directors.

Impractical though it is, Corporations law dictates that a director must know EVERYTHING that is happening with his or her company in real time despite the qualifications the director may have. An example of this would be: You and a friend or spouse decide to open a mechanical business in an area you deem needs that service.

You however, may and your partner may be qualified mechanics but have no knowledge of the operation of a business. Realising this you employ managers and staff that profess to have the business accumen required, but they are not directors.

Their workmanship is not to the standard they said and the books are a mess and the bills have not been paid.

Next you know, you are receiving summonses in the mail and the Tax man is after you.

The problem is under law, you are fully responsible for the operation of the business even though you did nothing wrong other than you failed to be superman and know everything about everything, you stand to loose all you have worked for.

With the number of ATO audits on the rise it is important that you keep your receipts.  The ATO motto is no receipt no deduction.  Under the Australian tax system of self assessment you are responsible for working out how much you can claim on your tax return.  In order to prepare an accurate tax return and support the claims you make, you need to keep careful records.  As accountants we prefer you do not give us a shoebox of receipts each year, instead give a typed summary (That way there is no guessing your handwriting) of your income and expenses.  This keeps your tax agent fees down.
Posted in Asset Protection
Please note that due to Covid 19 restrictions, we can only have one client in a meeting with a staff member at any one time. We will be staggering appointments and staff availability due to this.
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