The best structure for one client may not be the best structure for another client. There are many tax rules and considerations to take into account when determining the best structure for a client. Attached is a few pdf documents that compare some of the pro’s and con’s of each structure. This is by no means an exhaustive summary as there are many factors that need to be taken into account when deciding on the best structure. IMPORTANT: The tax laws are constantly changing. Children under 18 no longer qualify for the Low income tax offset on investment income, so if your tax planning strategy included income splitting with your children come and see us. Additional considerations include:
- Family, does the principal have a spouse, children, de facto? What are their ages and tax rates?
- What is the current tax status and liability of each person?
- Are there any other people who are part of the business?
- What assets does each person have?
- What debts does each person have?
- What type of business is it?
- Will the business have significant assets?
- How is the business financed?
- Does the principal expect to withdraw funds from the business in the early years?
- Does the principal have a good understanding of tax structures and tax itself?
- Are new partners to be added in the future?
- What type of clients and customers will the business have?
- Does the supplier of work specify the structure’s it will deal with?
- Is the business expected to make losses in the early years?
- Who is to run the structure on a day to day basis?
It is very important to consider all factors when deciding on the best structure and to get financial, legal and accounting advice.