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. | Limited borrowings 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.
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