Home – New Forums Starting your journey Family Trust and PTY LTD structure

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  • #988378
    jhopper
    Member
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    Hi

    I am seeing an accountant next week regarding setup of a business structure, just looking for some advice or comments on things to consider and options from experienced people.

    I am a roof plumber and earn money from my own jobs(supply materials and labour) as well as sub-contracting on an hourly, daily or per job rate.

    I basically want to know what is the bet way to structure things so i can pay myself and my girlfriend a weekly wage and protect the profits from tax as much as possible.

    Any advice would be great

    Cheers

    jhopper

    #1166927
    Dave Gillen – Former FS Concierge
    Keymaster
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    Hi jhopper,

    Not my area of expertise, but I wanted to welcome you to the forums. So welcome. :)

    Good luck!

    Dave

    #1166928
    Jimmy1
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    A trust with a corporate trustee with a sole director (you) gives you the most tax flexibility and asset protection.

    You can trade under the company name and sign (most) contracts as the company without disclosing that it is acting as a trustee of a trust.

    The corporate image gives you a higher profile. If you get sued, because you are in a high risk area if damage results from your work or something and insurance wriggles out, the company that signed the contract is worth $2.

    Profits can (subject to certain restrictions) be distributed with a lot of flexibility.

    It is not foolproof, so make sure you don’t cut costs by getting advice from a fool – or from an internet forum.

    #1166929
    TehCamel
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    if the majority if your income comes from your own personal exertion, you might get caught by PSI or PSB legislation.

    this basically says “if it’s income earned from your own exertion, even though you might choose to stream it to XYZ Person, it’s still classed as your income, so you cna pay tax thanks very much”

    there are guidelines to this here:
    https://www.ato.gov.au/Business/Personal-services-income/In-detail/Introduction/Personal-services-income—basic-information-you-need-to-know/

    #1166930
    NickKaro
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    Some good advice above.

    With respect to the PSI provisions, you should note that they are unlikely to apply if you work for a number of different clients and receive your work through the public (i.e. advertising, word of mouth, etc.).

    The trust/corporate trustee structure has its advantages, particularly for income splitting, however, there are increased complexities and costs with setting up and maintaining.

    Your situation should be fairly standard to the accountant, who should be able to explain the pros and cons to different structures.

    Feel free to contact me if interested in a second opinion.

    #1166931
    CaraTee
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    hubby is a chippy – historically he was just a sole trader and I was working for another business as an employee

    Now I am at home with kids and doing his bookwork (so technically not working)

    Under the advice of our accountant we have moved to a P/L ATF for a family trust – we were advised this would allow the most flexibility in distributing income and reducing tax. (however there are now worktest which need to be taken into account that restrict – something about if 80% of income is from one source then you can’t distribute?)

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