Most Accountants have a page on their website or marketing brochure telling you the type of services they offer. But how many people actually understand the jargon and what these services involve, let alone whether they need them or not? In this blog series we explain exactly what these services are and how they can benefit you.
So what does ‘Structuring Advice’ mean?
‘Structuring’ relates to the type of legal entity that a personal will choose to operate their business from or purchase investments in. The common types of structures include a sole trader, partnership, company, discretionary trust and unit trust. The type of structure used will affect your taxation position, any personal legal liability, the life of your business, and the availability of capital to run the business or purchase an investment. The rules surrounding each different structure are vastly different and have various consequences so it is important to get things right from the start.
Take for example Mary who wants to purchase an Investment Property. She currently works as an employee and is looking to purchase a property that will be negatively geared. One of her friends has recently purchased a property in a Discretionary Trust and Mary is wondering if she should do the same thing? A Discretionary Trust is the wrong structure for Mary as the investment property losses will be quarantined inside the Trust and she cannot use the losses to reduce her personal taxable income. If Mary purchases the property in her individual name she will receive a taxation benefit individually from the negative gearing.
By receiving the correct structuring advice from the outset you can save a lot of money and avoid unanticipated problems in the future.
Disclaimer: the article is only of a general nature and readers should take individual advice from their tax professionals to determine whether any of the strategies are applicable to their circumstances.