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Business Structure Comparison Chart

 

The table takes each structure and compares them against each other.

NSW Comparative Table

 

Entity

Income Tax

Capital Gains Tax

Land Tax

Asset Protection

Sole Trader

No income splitting. Must substantiate business deductions.  Losses can be offset against profits.

50% discount (on goodwill with the sale of the business) & main residence exemption & small business concessions available. Threshold available. Principal residence exemption available. None except by insurance. Business & non-business assets exposed.
Partnership of Individuals  

No income splitting. Losses not trapped in partnership, distributed to partners & can be offset against other profits. Can vary profits & losses payable to partners year to year.

Not part of partnership income. Divided between partners in accordance with interest in partnership 50% discount (on goodwill with the sale of the business) & main residence exemption & small business concessions available.  Threshold available. Principal residence exemption available.  None except by insurance and may also be exposed to partners debt due to joint and several liability of partners.
Company 30% flat tax. Dividends taxed. Franked dividends pass on tax paid. Restrictions on internal loans. Losses trapped in company. Limited splitting through classes of shares. No 50% discount. No main residence exemption. Tax free gains to company are taxed without imputation as dividends if distributed.  Small business concessions available. Losses trapped in company. Threshold available. Principal residence exemption not available. Related corporations may be assessed together. Relief possible if 60% of shareholders would suffer serious hardship.

 

Shareholders protected but value of their shares available to their creditors on bankruptcy. Directors potentially liable if trading while insolvent.
Unit Trust Taxed at unit holders level so depends on structure of unit holders.  Good for joint ventures. Losses trapped in trust. Depends on unit holders. 50% discount applies. No main residence exemption. Small business concessions available. Losses trapped in trust. Principal residence exemption not available.

Special notifications required. Threshold available to trusts created prior to 31/12/05 if fixed beneficiaries of same family group own 95% and combined taxable value less than $1m.

Unit holders protected but value in their units available to their creditors. Trustee indemnified.
Discretionary Trust Maximum ability to split income.  Biggest range of recipients. Losses trapped in trust.

 

50% discount. No main residence exemption. Maximum ability to split. Small business concessions available. Losses trapped in trust. No threshold Trustee  company.

Beneficiaries no value in their potential interest for creditors. Trustee indemnified.

Superannuation Fund No taxor 15% tax 33% discount meaning 10% tax, or no tax.No gearing & cannot own main residence. Threshold available to complying fund.  Limitedborrowings now available but lender has no recourse against fund. Beneficiary’s account protected. No claim by fund against beneficiaries for indemnity.

 

Our dedicated team can assist you on how to set your business up as a trust. Complete and submit an express enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.