In our role as accountants and advisors, we consistently provide guidance to families seeking to establish and maintain fair and equitable business affairs. The journey often begins with businesses adopting simple ownership structures, yet as they progress and expand, intricate challenges emerge, necessitating the delicate management of equity interests, tax considerations, and commercial risk.
The incorporation of additional family members into the ownership framework elevates the importance of achieving a delicate balance in areas
such as tax optimisation, risk mitigation, and ensuring equitable treatment. An inherent challenge lies in differentiating between roles in
ownership and management.
Ownership encompasses legal and beneficial aspects, entailing the sharing of profits and losses, assuming commercial risk, and contributing
to capital. Conversely, management roles involve elements like salaries and bonuses, contingent on factors such as experience and
responsibilities.
Maintaining clarity regarding equity positions emerges as a fundamental aspect of effective governance. Introducing periodic equity statements, delineating the inception and conclusion of equity positions, the distribution of profits, and deductions like drawings and taxes, serves to amplify transparency.
Complex ownership structures may find benefit in the establishment of distinct entities for each family member's equity interest.
Given the intricate nature of these considerations, periodic reassessment of your equity position emerges as a prudent and strategic investment for the upcoming year.
Reassessing your equity position is a wise investment for the year ahead.
Falling behind on your BAS lodgements looks like an administrative problem. Left long enough, it becomes an expensive one, because the GST you collected stays payable indefinitely while the GST credits you are owed disappear after four years. Here is what that looks like in dollars.
With negative gearing now quarantined for established dwellings, new house and land has become the sensible play for investors — but there is a trap in the first eighteen months. Interest on the land is denied, while interest on the construction is not. If the bank has written one loan, someone has to do the sums. Here is why it pays to split the loan before you sign.
When the draft legislation for the trust minimum tax was released, it came with a reassurance: if you do not want to restructure, you can simply make an election instead — no restructure, and no state stamp duty. That is accurate, but it is also a very small part of the decision. Here is why you should choose your structure for the eventual sale of your business, not for the announcement.
