3. Discretionary Trust with Corporate Trustee Risk and Liabilities – Limited Liability Costs of Structure – Incorporate shelf company – Formation of trust deed. ; However – It is a non-reporting entity – No requirement for audit.
4. Discretionary Trust with Corporate Trustee Taxation Benefits – Ability to steam income. – Access to 50% CGT discount – Entitled to small business concessions Final Criteria? –
Editor's Notes
Risks and liabilities: Sole Trader: High because unlimited liability. P’ship: High because unlimited liability. Trust: Low because of limited liability through corporate trustee. Pty Company: Low because of limited liability. Public Company: Low because of limited liability. Costs of the Business Structure: Sole Trader: Non reporting entity, no audit costs, low business registration fee. P’ship: Non-reporting entity not subject to audit and the costs to draft up the p’ship agreement can be low. Trust: Will need to incorporate company, form trust deed, however non reporting entity and no audit required. Pty Company: Will need to incorporate company, small pty company so non reporting and not subject to audit. Public Company: Directors fees required to establish, company must be audited as it is a reporting entity, incorporation costs.Taxation Benefits:Sole Trader: No ability to stream income, taxed at owners marginal tax rate however has access to 50% CGT discount. P’ship: Limited ability to stream income, taxed at partners marginal tax rate however has access to 50% CGT discount. Trusts: See speech. Pty Company: No access to CGT 50% discount, taxed at concessional rate of 30% on profit, easy to split income, various other deductions such as super paid to directors allowable. Public Company: No access to CGT 50% discount, taxed at concessional rate of 30% on profit, easy to split income, various other deductions such as super paid to directors allowable. Final Criteria: ????
