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Recommendations - Trusts, Business, Property, Shares

Discussion in 'Accounting, Tax & Legal' started by theitpro, 3rd Apr, 2010.

  1. theitpro

    theitpro New Member

    3rd Apr, 2010

    After a many weeks/months searching for clues/assistance, I've finally stubbled across this excellent website!
    I've read many of the posts here but was wondering what the best is for my personal situtation and if there are any people who have similar situations to me that could help me out.

    I'm just starting out (23 years old and not married) but want to get it right before I set things up in the wrong structures etc.

    I do not have a company nor a trust setup.

    I have approximately $30,000 in shares which are a mix of both short term and long term.

    I also have approximately $30,000 in cash which I just leave in the bank.

    I have a fulltime job which pays about $45,000 before tax and before Hecs debt.

    On the side I also have a small little website design/computer business which I mainly do for collegues/friends so profit is limited at the moment and not recorded.

    I'd like to setup this business properly though as I believe it has some potential.

    What is the best way I should go about setting up a trust/business. I've done some research and have found that I should setup a trust which 'owns' a company.

    Would I then move my shares into the company or the trust for tax purposes?

    If I were to buy a house/unit, would it go through the company or the trust?

    If I buy additional things such laptop, internet, stationary etc. for the business, does this go through the trust or the business?

    Can my personal tax be offest against any of these investments (i.e. if I make a loss on shares or if I make a loss in the business)? (I find it frustrating to know that if I work for 3 years, I actually work for the goverment for 1 whole year in tax)

    So essentially:
    1. Is setting up a trust which 'owns' a business the best option?
    2. What should I do with my shares/ future property?
    3. Where do my expenses/assets get claimed in appropriately?

    Please let me know if I am not being clear and thank you so much for helping an amateur.
  2. Wood Accounting

    Wood Accounting New Member

    5th Apr, 2010
    Sydney, NSW
    Trust and investment structures



    "Moving" your shares to another structure will trigger CGT. Capital losses can only be offset against capital gains in the same or future years. If you make a CGT loss in your name and move everything into trusts then that CGT loss will stay in your name forever and not get used.

    Setting up a business in a separate entity such as a trust is a good idea. There are many types of trust so you need to see an Accountant and explain you current and FUTURE situations.

    DO NOT buy investments in the same structure that you run a business from. Those assets could be subject to legal proceedings or creditors.

    The thing to remember with trusts is that all income has to be distributed to someone each year. In your situation income will still be taxable in your name. IE this will not save you a cent in tax unless you have low income spouse or relative to distribute to.

    You must buy you own home in your name to avoid it being taxed. All investment properties can be in the same structure as share investments.

    Spend $220 and see a good accountant. It will save you 10 times that over the long run.

  3. GregR

    GregR Reid Consultants

    13th Jul, 2009
    Berwick Vic
    It is a large area and I agree, spend some money and time with a good accountant. The one caution is that they may suggest a company and trust - that is how they make money, now and in the future.

    You would use a trust largely for asset protection and income distribution. You would use a company for legal separation and if you were looking at different ownership.

    The answer will depend on your longer term goals, what will you look like in 10 and 20 years? I am not big on spending money on structures if there is no need, you just complicate things and incur additional costs.

    Have that idea of what you want to look like before you seek advice, then get a second and third opinion.
    Good luck