Q: Looking for advice around the best potential structure for a company so that its assets are protected. Some accountants have suggested:
1. Setting up a private company and allocating its shares to a discretionary trust
2. Setting up a private company and allocating its shares to a discretionary trust where the trustee is a private company
3. Setting up a private company and allocating its shares to a discretionary trust where the trustee is another discretionary trust
Which do you recommend?
A: Hi Mireille,
It would be remiss of me to recommend an option without understanding your personal circumstances in more detail (Although we can rule out option 3 as it is not legally possible). Asset Protection is one of two key aspects to consider when choosing business/investment structures (the other being tax effectiveness) and it is smart that you have chosen to seek advice on this issue.
Mireille it would be easy to simply recommend a structure which, on face value, provides a level of asset protection. However without ensuring the structure is tailored to your personal situation, as well as your short & long term aspirations, we find the asset protection the structure was set up to provide can often fall flat.
I would be more than happy to personally walk you through some scenario's where certain structures could provide asset protection in your situation, we usually find having a visual representation of the structure & scenario helps people understand how they function once set up (which is why we use whiteboards & TVs to demonstrate this).
Mireille if that is of interest please feel free to 'Contact Expert' below, we can exchange details and go from there.
Have a lovely day
Q: Our business has been operating for 18 months and we need additional investment to grow. Instead of taking on new investors is it possible to set up our own SMSF to invest funds and have shares in the business?
A: Hi Bernadette,
Congratulations on your business’ growth over the past 18 months, you have hit a road block most businesses take a little longer to reach. Access to capital is one of the key hurdles businesses face in Australia, and with the banks unwilling to ‘come to the table’ for small business the funds sitting in your superannuation can look attractive.
Bernadette when looking to invest through your (potential) SMSF it is important to be mindful of the ‘in-house asset rules’ which limits any related-party investment to less than 5% of the fund’s total assets. The SMSF would also be unable to own more than 50% of the shares in the company, and the purpose behind the investment must not be to provide indirect financial assistance to the fund members (i.e. don’t lend/invest the money in the company and then give it to yourself)
Hopefully that helps Bernadette, please be aware that these are just some of the key areas to be aware of in this scenario and by no means cover all the moving parts when it comes to SMSF’s.
Bernadette I am more than happy to catch up for a face-to-face to discuss further and see if we can be of assistance, I would love to hear more about your business.
0415 222 137 | 02 9251 5558
Q: 3 yrs ago I was introduced to MLM business the women who introduced me to it told me to get an ABN number I did but then I didn't do anything with the MLM business, and I didn't do anything with the ABN. Can I just cancel it or should I do tax return?
A: Hi Asha,
If there was no business activity whatsoever over the past 3 years then you should be fine to simply cancel the ABN. Keep in mind there may be other reasons you need to lodge a Tax Return (e.g. Receive wages or other income during the year).
Hope this helps, have a good week.