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James Millar
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downhaul, post: 210893 wrote:
Thanks for the replies so far.

I guess my thoughts so far are quite basic. I’m not looking to have any shareholders other than myself or get a loan etc.

It’s true that corporation tax is lower than personal income tax, but since I want to get the money to myself personally in the end anyway how will having a company benefit me?

It won’t save you any tax – only defer it until you draw the funds out of the company. The 30% company tax rate applies to company profits but once they are distributed as dividends with a tax credit you end up paying the difference between your marginal rate. Or you may get a refund if your personal tax rate is below 30% in the year of receiving the franked dividend.

It may give you some additional asset protection, additional perceived credibility and additional local business clients that only want to transact with a company for their own compliance purposes. If you are undertaking in R&D activities a company also has access to R&D concessions that no other entity gets. Possible income splitting but as stated above there is a strong possibility that both PSI and general anti avoidance provisions would strike that down.

All that for about $2k to $3k in extra cost per annum in reporting. You need to weigh things up carefully.

Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900