Structures & Asset Protection

Individual

Do you work for an employer for wages? PAYG wage earners or investors lodge Individual or "I" Returns.

Sole Trader

Are you an individual business operating under own name or registered business name? Then you are a Sole Trader. This is the cheapest option to set up your own business and easiest to administer. Sole trader is personally liable and losses can usually be offset against the individual's income from other sources.

Partnership

An association of persons carrying on business, in common, with a view to a profit. A partnership is an entity as distinct from the partners individually. A partnership must lodge a tax return, but is not liable to pay tax. The net profit is distributed to partners in proportion to their individual interest in the partnership as a whole. Each partner taxpayer is required to lodge an individual tax return based on their share of the income. Partners are jointly and severally liable. Losses can reduce the partner's other assessable income in certain circumstances.

Trust

A trust is an entity in its own right. The taxation of trusts differs from the taxation of individuals. The net income of a trust is not taxed in the hands of the trust itself, but rather the taxation liability for a trust's net income may attach to the trustee or the beneficiary. Trustees may be liable and losses can be offset against future trust income.
Types of trust include;

• Fixed trust - where the trust deed sets out in clear terms which beneficiaries are entitled to what and when
• Unit trust - type of fixed trust where the number of units held in the trust indicates each unit holder's interest in the trust
• Discretionary trust - The discretionary trust deed leaves the class of beneficiaries open and gives the trustee's discretion as to which beneficiary is distributed what proportion of the income.
• Superannuation funds - Can be industry based or personal and are in the form of a trust, although the tax consequences for Superannuation fund trust are different from other trusts.

Company

A company is a separate legal entity at law, separate from its members with its own rights and responsibilities. Companies are taxed separately from their members and unlike partnerships, there are no taxation consequences for the individual shareholder until something occurs that affects them. Companies are taxed at a flat rate of 30%, which is ordinarily listed to the company although directors can be liable. Losses are offset against future company income.

Self Managed Superannuation Fund

Superannuation is a long-term savings arrangement for individuals, that is primarily designed to provide income for retirement. The trustees of the fund are responsible for the day to day running of the fund. A complying Superannuation Fund is taxed at a concessional rate of 15%, while a non-complying fund is taxed at 47%.