By virtue of my curious mind…I’m always on the lookout for things to do – particularly things that might seem a little out of the ordinary…

Last weekend I attended a book event at the Warrnambool and District Historical Society where Bronwen Hickman was in attendance to provide an insight into her new book.

Bronwen is a Melbourne writer, historian and teacher and has been researching the life of Mary Gaunt for approximately 20 years – her research saw her follow in Mary’s footsteps across the world as best she could.

The recently released book “Mary Gaunt – Independent Colonial Woman”, tells the story of Mary Gaunt, including some information from her unpublished autobiography – I was delighted to hear Bronwen speak of her findings at this event.

Mary Gaunt was a woman of the colonial era – born in the Victorian Goldfields in 1861; she was well educated, well connected…and a rebel!  As one of the first women to attend the University of Melbourne, she wrote articles and stories in order to fund her travels – her solo travels (can you see why I was drawn to attend this event?)

Of further interest though, was the fact that Mary lived in Warrnambool for some time where she was married to the Honorary Medical Officer at Warrnambool Hospital – Dr Miller.  Unfortunately it was Dr Miller’s health concerns which saw them leave Warrnambool – and his subsequent death was the catalyst for Mary venturing out to travel the world.

I’ve only just started to read the book myself, so I can’t make any recommendations as yet, but if you are interested you can purchase a copy through Melbourne Books.

And yes, Bronwen and I had a good chat about the perils of being “Bronwen with an e”…

Regards

In the previous posts of our “Structure” series, we have discussed the entities which can be used for operating your business activities.

All of those entities can also be used for general investing activities, but one of the most tax effective ways of holding investments is through a superannuation fund.

There are a number of types of superannuation funds, but the most common are:

• retail and industry superannuation funds
• self-managed superannuation funds

The benefits of holding investments in a superannuation fund include:

• the income earned by investments is taxed at a low rate of 15%
• investment income is tax free when in “pension phase”
• there is a possibility of an individual making deductible contributions to the superannuation fund, which may be tax effective

Disadvantages of holding investments in a superannuation fund include:

• self-managed superannuation funds are expensive to establish and maintain
• the individual may have little or no say in the investments made by a retail or industry fund
• the investments belong to the superannuation fund and should not be used by the individual
• investments in superannuation funds (and their proceeds), are not readily accessible as they are required to be held until preservation

The laws regarding superannuation are varied and complex – please note: you should consult a superannuation specialist before establishing a self-managed superannuation fund or before making any significant superannuation investments, you should also consult a licensed financial planner to assist with your investments – I can provide referrals if you need to know who to talk to!

Regards

Today we explore the concept of “trusts”  – certainly one of the more complex types of structure to explain!

The complexity surrounding the use of trusts and explaining them is due to the types of trusts available and the elements involved.

Trusts have been a common structure used in small business since the early 1980’s…however the Australia Taxation Office (ATO) have refined the laws regarding trusts in recent years and many of the tax benefits previously associated with trusts (particularly discretionary trusts), are no longer available.

The types of trusts include discretionary trusts (commonly referred to as family trusts), unit trusts and hybrid trusts.

In addition to the type of trust, there are five elements which must be present being: settlor, trustee, trust deed, appointor and beneficiaries.

The benefits of operating as a trust include:

• there may be taxation advantages of operating as a trust (depending on the circumstances of the individual involved)
• there is sometimes the ability to stream income to particular beneficiaries
• in some cases those involved intrusts may have limited liability

Disadvantages of operating as a trust include:

• establishment costs can be high, particularly when a specialised trust deed is required
• capital gains tax (CGT) may be payable when the trust is dissolved (depending on the trust arrangements)

In all honesty, trust arrangements really need to be discussed on a case by case basis as there are so many variables.  I also find that while this is a common structure for small business, very few owners operating in a trust actually understand their circumstances.

If you’d like some help with your business operated as a trust, please complete the Contact page.

Regards

The word “company” often conjures up thoughts of large multi-nationals and members of the stock exchange – but small businesses can also be operated through a corporate structure.

The process of establishing a company is referred to as incorporation, and it is regulated by the Australian Securities and Investments Commission (ASIC).

You should also be aware that there are a few extra responsibilities if you decide to trade through a company. When discussing companies, you will hear terms like director, shareholder, dividend and franking credit – it is extremely important that you gain a good understanding of these terms, as well as your responsibilities, if you are looking at trading via a company.

In addition to holding a Tax File Number (TFN) and Australian Business Number (ABN) – each company is issued with an Australian Company Number (ACN).  Each company is also required to lodge its own income tax return, and it is responsible for paying income tax on its earnings.

The benefits of operating as a company include:

• there is a protection mechanism by way of limited liability ie: shareholders of a company are only liable for any unpaid amount on their shares and personal assets are not at risk
• as a company is a separate legal entity, it can employ both directors and/or shareholders and pay them a wage or salary (unlike the sole trader and partnership structures)
• income tax is paid at a flat rate (currently 30%), which is often less than the applicable rate for individuals
• any spouse, partner or child can be issued with shares which allows income to be diverted to these parties by way of dividends, and;
• due to the regulation surrounding companies, management is often more organised which may result in formalised decision making processes and structured operations

Disadvantages of operating as a company include:

•  a company is expensive to establish and maintain (compared to other structures) – there is an establishment fee and ongoing fees payable to ASIC and often legal and accounting fees are higher due to the complex nature of work to be completed
• the profits of the business are locked into the company until such time as they are paid out to shareholders as dividends, and:
• increased compliance required with government legislation is very time consuming and sometimes owners of businesses operating as a company feel overwhelmed by “red tape”

If you’d like to discuss your business operated as a company, please complete the Contact page.

Regards