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Demystifying Business Structures: Companies, Trusts and Sole Traders 16 February 2012

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

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Demystifying Business Structures: Companies, Trusts and Sole Traders 16 February 2012

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  1. Demystifying Business Structures: Companies, Trusts and Sole Traders16 February 2012 Leon Loganathan Partner Darwin Palmerston Casuarina Parap Alice Springs Gove

  2. 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 • No asset protection Darwin Palmerston Casuarina Parap Alice Springs Gove

  3. Business Structures – Company • What is a company • Separate legal entity • Constitution/Shareholders/Directors • Why use a company • Asset protection • Tax benefits • Disadvantages • Administration and reporting requirements - ASIC • Treatment of losses • Capital Gains Tax 50% general discount does not apply Darwin Palmerston Casuarina Parap Alice Springs Gove

  4. Business Structures – Trusts • What is a trust • Trust deed - Settlor/Appointor/Trustee/Beneficiaries • Types of trusts • Unit Trust • Discretionary Trust • Why use a trust • Asset Protection • Tax benefits • Flow through of income to beneficiaries • Flexibility in distributing income • Availability of 50% CGT general discount Darwin Palmerston Casuarina Parap Alice Springs Gove

  5. Business Structures – Trusts • Disadvantages • 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 Darwin Palmerston Casuarina Parap Alice Springs Gove

  6. Transferring Assets - Restructuring • Stamp Duty • Are there any exemptions • Capital Gains Tax • Is there any rollover relief • Documentation • Legal and taxation requirements Darwin Palmerston Casuarina Parap Alice Springs Gove

  7. Thank You Darwin Palmerston Casuarina Parap Alice Springs Gove

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