Company Tax has been 30% for many years now and this can be the reason why people open a company rather than operate under a trust or other entity.
If the business is run in a normal ‘mum dad and a few kids family setting’ with the new trust rules and with the partnership income splitting rules, if you cannot get the two main individuals under $80,000 in income then they are paying over 30% in tax and then it was better to have operated in a company.
These are some questions you need to ask in starting and buying business.
Whether you expect the business income to be over a certain amount which can be better to keep in a corporate setting or whether you can take advantage of the low income limits and therefore have individual tax of less than the 30% which has to be considered if you have jobs outside your business and the ages of your kids and their income. All questions you have we will run through with you on setting up your business to ensure you get the best advice for your welfare now and in the future when the business grows.
We also are on top of this new budget… how soon can this new corporate rate get passed!!! Small Businesses in a company structure could be in for a great new rate of 28.5% tax. This will potentially mean that Trusts get phased out as meeting the rate of 28.5% means that income splitting to make the individuals have taxable income and pay less than 28.5% will be less simple in most family settings. We will be the first to get your business in the right structure for you to start getting you the best rate of tax. Our ears are to the ground waiting for the politicians to pass this new rate and you will be the first to know what this means for your business.