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Will @ ABB
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Stewraz, post: 211088 wrote:
Thanks Rob,

Those links are a good place to start, much appreciated. Not sure if there are any TAX experts here, I would love to know if there are a few benefits to the partnership approach. Having its own TFN and paying a flat rate of 30% company tax is all good and well, though are there other perks to being able to write more off and declare more against the company TFN?

Hi Stew,

Might just have to clarify a couple of points there – ‘partnerships’ as a business structure aren’t entitled to a flat tax rate of 30%, that’s only for businesses setup in a ‘company’ structure. In terms of benefits of a partnership over sole trader – their really isn’t any. In fact, there are more benefits to setting it up as a sole trader business for your wife, if you don’t plan to actually take any portion of the profits as your own income. All income from partnerships is still reported on as personal income, despite having a partnership TFN.

Having said all of that, there’s probably 3 set options you’ve got:

1: Leave it as it is – definitely not the preferred option, because if you’re set up as 50/50 partners then 50% of any income earned will be reportable on your individual tax return.

2: Cancel the ABN and setup as a sole trader – probably the easiest option in terms of paperwork and minimal cost, you don’t have to worry about your own personal reportable tax, and your wife’s tax is fairly easily calculable, not to mention the benefit of the tax-free threshold.

3. Cancel the ABN and setup as a company – a bit of mucking around with paperwork (annually as well as initially setting it up), and a bit more cost involved. However, the reason I mention it is it means limited liability, plus the flat tax rate mentioned above.

If you’re still unsure, I’d suggest setting up a meeting with an accountant to further clarify the tax implications. There is plenty of information available both on this forum and on government websites like the Australian Business Register – but it can be a bit overwhelming/confusing if you’re not a tax professional.

Hope that helps!