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Welcome to Part 2 of our restructure series.

We have discussed in Part 1 of this series, why restructuring is so common and so important to consider for all businesses including asset protection reasons. We discussed the basic factual issues and special issues that can influence the best structure for a business.

Here we analyse all the structural components for various commercial and taxation considerations in a table form for ease of reference:

Primary Individual Spouse Disc Trust (DT) Unity Trust w/Ind Unitholders Unit Trust w/DT Unitholders Company with Ind S/holders Company with DT S/holders Part’ship Of DTs
Asset Protection x √ √ x √ x √ x (9)
Flexibility of Distribution x x √ x √ x √ √
Access to Cash √ √ √(1) √(1) √(1) x x √
Access to 30% tax rate or less x x √(2) x √ √ √ √(2)
CGT 50% discount √ √ √ √ √ x (6) x (6) √
SB CGT 50% Discount √ √ √ √(4) √(5) √(7) √(7) √
CGT Retirement √ √ √(3) √(3) x √(8) x √
Privacy of accounts √ √ √ √ √ x (10) x (10) √

Notes:

  1. If there is a corporate beneficiary in the relevant year of income, subject to entry into of a Div. 7A loan agreement or creation of a sub-trust: TR 2010/3;
  2. If use corporate beneficiary;
  3. Subject to distributions in year of sale;
  4. Cost base reduction when distributed;
  5. Available to unit trust, but not to unitholders, unless unit trust wound up within 12 months of the sale or the disposal of the active business;
  6. Shareholders may get when sell shares;
  7. Company entitled if 90% or more of shares traced to “significant individuals” and their “CGT concession stakeholders”, but cannot distribute tax free, unless company is wound up within 12 months;
  8. Subject to significant individuals;
  9. For small business CGT relief it is necessary that there is a “significant individual” so that person will need to get at least 20% of the gain in the year it is made. If that person is the “at risk” person, then asset protection is not available.  If it is the spouse of the “at risk” person who is the significant individual, then asset protection can be achieved in relation to the distribution of the gain;
  10. Audit and disclosure via ASIC required if large propriety company.

In relation to the Restructuring, we have developed significant expertise and welcome your enquires. Please do not hesitate to contact Anthony Pointon or Aaron Zoanetti to discuss.

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