WELCOME to QUANTUM BUSINESS HOUSE
By Ben Youn
Copyright 2014 Quantum Business House
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2 hours for each session
10 minutes tea time
Bathroom & Kitchen
Today’s Speaker
Please network each other
Future Plan
Business Forum
Networking Events
Business Mentoring
Copyright 2014 Quantum Business
House
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Setting up business structure (June 04)
Buying a business (June 11)
Business Planning (June 18)
Marketing (June 25)
Raising Finance (July 02)
Financial Management (July 09)
Tax system and compliance issues (July 16)
Risk management (July 23)
Financial Health Check (July 30)
Business Evaluation (August 06)
Copyright 2014 Quantum Business House
Copyright 2014 Quantum Business House
Sole Trader
 Partnership
 Company
 Trust
 Which one is best for my business?
- The answer depends on your
circumstances! (See the attached)
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Copyright 2014 Quantum Business House
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Sole Trader
Easy to setup (ABN & TFN)
Combined income tax with the individual TFN
Asset protection? – think again!
Business Liabilities including employee’s
wrongdoing – Owner’s Personal Liability
Difficult to raise finance
Difficult to sell the business when time comes.
Higher tax rate (marginal tax rate)
Copyright 2014 Quantum Business House
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Partnership
Partnership agreement (essential)
Splitting income between partners
Partnership business loss can be offset against
other income of the partner
Each partner liable to pay tax
Each partner holds liability for the partnership
business (separately and as a group)
Not a big deal for tax concession perspective
Break Up – New partnership and capital gains tax
Copyright 2014 Quantum Business House
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Company
A separate legal entity
Limited Liability for shareholders
Director’s role and responsibilities
(Corporations Act 2001)
Company tax rate (currently 30% subject to
be reduced down to 28.5% soon!)
Financial reporting and audit obligation
(tests)
Copyright 2014 Quantum Business House
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Trust
Unit Trust vs. Discretionary Trust
No separate legal entity (except for GST)
Trustee’s role and power
Trust Deed
Beneficial interest (Unit holders vs.
discretionary beneficiaries)
Why Trust?? – Flexibility & Asset Protection
PART IVA of Tax Act (dominant purpose test)
Copyright 2014 Quantum Business House
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Trust
Two ownerships (legal ownership & beneficial
ownership)
Protecting trust properties (beneficial
ownership)
Income Splitting
Trustee’s liability for business and
reimbursement from trust property (trustee’s
entitlement)
But beneficiaries are safe from debts.
Copyright 2014 Quantum Business House
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Trust
Corporate Trustee: setting up corporate
structure and ease of succession
Costs
Access to assets could be difficult
Copyright 2014 Quantum Business House
Family Trust
Company hold
assets and Unit
trust hold shares
Company 1
CGT Tax
Concession for
Beneficiaries;
“Flow through”
Unit Trust
Company 2
Copyright 2014 Quantum Business House
Family Trust
•Loan: Div. 7A
•7 year repayments rule
•Distributable Surplus
Unit Trust
New
investment
Bank
Loan
Company
1
Company
2
Copyright 2014 Quantum Business House
A New Company
Unit Trust
Bank
Company
1
Company
2
Copyright 2014 Quantum Business House
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Rollover of units for shares (Sub Div.124H)
Then tax consolidation
Conditions:
Exchanging shares must be non-redeemable
Must hold the same proportion of units &
value in share
Copyright 2014 Quantum Business House
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Spouse not exposed to business risks
Family law issue (family home is an asset of
marriage) – legal ownership vs. marriage
entitlement
Capital Gains Tax – Main residence exemption
A discretionary trust
Copyright 2014 Quantum Business House
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Risk minimisation
Business risks
Default risks
Personal guarantee
Relationship breakdown
Tax minimisation
Income tax and CGT (50% discount)
Answer: a discretionary trust
Copyright 2014 Quantum Business House
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Negative Gearing Issue – The owner must
ensure there is other income to offset the
loss created by the negative gearing.
Copyright 2014 Quantum Business House
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Please use us as free business adviser
Free Initial Consultation
Packaged Services with fixed fee
Copyright 2014 Quantum Business House
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Buying a business
Business Planning
Marketing
Raising Finance
Financial Management
Tax system and compliance issues
Risk management
Financial Health Check
Business Evaluation
Copyright 2014 Quantum Business House