Are you in the correct corporate structure?
With the recent reduction in tax rates and the low income tax offsets, now is the time to review your current business structure. A table of the new individual tax rate is below.
| 2008/09 Taxable Income | Tax Rate | 2009/10 Taxable Income | Tax Rate |
| $0 - $6,000 | 0% | $0 - $6,000 | 0% |
| $6,001 - $34,000 | 15% | $6,001 - $35,000 | 15% |
| $34,001 - $80,000 | 30% | $35,001 - $80,000 | 30% |
| $80,001 - $180,000 | 38% | $80,001 - $180,000 | 38% |
| $180,000 + | 45% | $180,000 + | 45% |
The corporate trustee (a company) provides legal protection over personal assets from business creditors and the family trust provides maximum flexibility in distributing profits. Additionally, children under 18 can now also receive $1,333 each tax free, effectively saving an average of $400 tax per child. Also, with some careful planning WorkCover liabilities can be reduced.
As can be seen from the above tax table, individuals can have a taxable income of $80,000 before paying more tax than the company tax rate of 30 per cent - more business profits can now be paid to individuals before a company structure provides a better taxation solution. Below is a diagrammed view of a company/trust structure.
As each family and business is different, there is no one right structure for everyone. Call us to discuss all of your options, or click here now to arrange for a free consultation.
