Business structures
If you are thinking of setting up a new business, expanding business or investing through an entity, it is important to plan and choose a business structure that is appropriate for you.
A business can be established as a sole trader, partnership, trust, company or multiple structures. Each business structure has its benefits and limitations from tax perspectives, potential personal liability, and specific legal obligations when employing people.
Broadly, the key considerations of a business structure are asset protection, tax rates, funding arrangements, flexibility to split income, future capital gains tax, business succession, and ease of changing ownership structure.
Which structure to use?
No structure is perfect for a business. Each structure has its advantages and disadvantages. However, setting up your business under an incorrect structure can be problematic and result in loss of tax benefits, significant capital gains tax, loss of personal assets, and other risks.
At Ezzura Tax Advisory, our tax specialist can help you review and provide a tax-effective solution that is appropriate for your business and aligns with your business objectives and circumstances.
Tax structure for property acquisitions
You can purchase a property under a partnership, discretionary trust, unit trust, company, self-managed superannuation fund or multiple structures.
What is the most tax-effective structure for acquiring property investment?
Generally, it depends on whether the property is residential or commercial, the need for improvements, funding arrangements and how income and capital gains are distributed.
What is the best structure to hold a property?
There is no “one-size-fits-for-all all” structure. Each structure has its advantages and disadvantages. At Ezzura Tax Advisory, our tax specialist can help you review and provide a solution for holding your property in a tax-effective structure that is appropriate for your circumstances and objectives.
Business restructuring
It is important to review your current business structure to ensure it still suits your business. The signs that your current structure may no longer be appropriate are:
- The current structure does not provide adequate asset protection for your valuable business assets
- Your business turnover has significantly increased
- You intend to expand your business globally
- The ownership structure of the business will change
- The current structure does not provide taxation benefits
- The current structure causes significant Div 7A issues
- The current structure does not provide for succession planning
Does your business need a restructuring?
Our tax specialist at Ezzura Tax Advisory has the expertise and experience to review your current business structures, streamline the complexities of tax restructuring and provide a tax-effective solution that aligns with your commercial objectives.
Selling business
If you are considering selling your business, it is important to plan and explore different options as they can result in different tax outcomes. For example, selling a business can result in different tax outcomes from selling shares in a company or units in a unit trust.
Accessing the benefit of small business CGT concessions is crucial in selling your business as the capital gain on the sale of a business can be reduced or deferred. The small business CGT concessions are.
- The 15-year exemption
- The 50% active asset reduction
- The retirement exemption
- The rollover relief
The rules to qualify for the small business CGT concessions are complex and there are a lot of special rules and interactions in the CGT legislations that must be considered to ensure the conditions are satisfied.
The ATO has also been actively auditing taxpayers claiming the CGT concessions due to the high level of complexity and confusion in applying the small business CGT concessions. The ATO could also reject the superannuation contributions applied to the CGT cap amount and apply them to the non-concessional contribution cap in the case of an audit.
How we can help in claiming small business CGT concessions
At Ezzura Tax Advisory, our tax specialist has extensive experience and a high level of tax technicalities to navigate you through the complexities of small business CGT concessions, ensure the eligibility conditions are satisfied and the concessions are applied correctly. The cost of the mistake in satisfying the small business CGT concessions can be costly due to the large capital gain.
Tax planning
Tax planning strategies for year-end can provide tax savings for businesses.
An optimal tax planning strategy requires in-depth knowledge of the tax law and an understanding of your business and circumstances. Generally, this involves identifying tax opportunities to maximise deductions, defer income and apply special rules and concessions in the tax law.
At Ezzura Tax Advisory, our tax specialist has vast experience and the skill set to identify tax opportunities and formulate an optimal tax planning strategy that achieves your commercial objectives and suits your circumstances.
Research and development
Your business may qualify for the Research & Development tax incentive if your business undertakes research and development (R & D) activities. The R & D incentive can provide your business with tax savings and a refund of up to 43.5% of your R & D expenditure if the company suffers a tax loss.
To qualify for the R & D incentive, your R & D activities must be eligible R & D activities.
- R & D tax offset from 1 July 2021
- For businesses with a group turnover of less than $20 million, the refundable R & D tax offset is your corporate tax rate plus an 18.5% premium.
- For businesses with a group turnover of $20 million or more, the non-refundable R & D tax offset is your corporate tax rate plus an incremental premium. These premium increments vary based on the intensity of R & D activities.
How we can help your business with the R & D Tax Incentive
The R & D Tax Incentive requires understanding your R & D project, implementing greater control of the R & D project, knowledge of identifying eligible R & D activities, and managing the records of R & D activities. At Ezzura Tax Advisory, our tax specialist can assist in applying for the R & D Tax Incentive, providing guidance for the accounting and bookkeeping of your R & D project, and administering the tax compliance of the R & D Tax Incentive.
