By Ben Youn Copyright 2014 Quantum Business House WELCOME to QUANTUM BUSINESS HOUSE

 2 hours for each session  10 minutes tea time  Bathroom & Kitchen  Today’s Speaker  Please network each other  Future Plan - Business Forum - Networking Events - Business Mentoring Copyright 2014 Quantum Business House

1. Setting up business structure (June 04) 2. Buying a business (June 11) 3. Business Planning (June 18) 4. Marketing (June 25) 5. Raising Finance (July 02) 6. Financial Management (July 09) 7. Tax system and compliance issues (July 16) 8. Risk management (July 23) 9. Financial Health Check (July 30) 10. Business Evaluation (August 06) Copyright 2014 Quantum Business House

 Sole Trader  Partnership  Company  Trust  Which one is best for my business? - The answer depends on your circumstances! (See the attached) Copyright 2014 Quantum Business House

 Sole Trader - Easy to setup (ABN & TFN) - Combined income tax with the individual TFN - Asset protection? – think again! - Business Liabilities including employee’s wrongdoing – Owner’s Personal Liability - Difficult to raise finance - Difficult to sell the business when time comes. - Higher tax rate (marginal tax rate) Copyright 2014 Quantum Business House

 Partnership - Partnership agreement (essential) - Splitting income between partners - Partnership business loss can be offset against other income of the partner - Each partner liable to pay tax - Each partner holds liability for the partnership business (separately and as a group) - Not a big deal for tax concession perspective - Break Up – New partnership and capital gains tax Copyright 2014 Quantum Business House

 Company - A separate legal entity - Limited Liability for shareholders - Director’s role and responsibilities (Corporations Act 2001) - Company tax rate (currently 30% subject to be reduced down to 28.5% soon!) - Financial reporting and audit obligation (tests) Copyright 2014 Quantum Business House

 Trust - Unit Trust vs. Discretionary Trust - No separate legal entity (except for GST) - Trustee’s role and power - Trust Deed - Beneficial interest (Unit holders vs. discretionary beneficiaries) - Why Trust?? – Flexibility & Asset Protection - PART IVA of Tax Act (dominant purpose test) Copyright 2014 Quantum Business House

 Trust - Two ownerships (legal ownership & beneficial ownership) - Protecting trust properties (beneficial ownership) - Income Splitting - Trustee’s liability for business and reimbursement from trust property (trustee’s entitlement) - But beneficiaries are safe from debts. Copyright 2014 Quantum Business House

 Trust - Corporate Trustee: setting up corporate structure and ease of succession - Costs - Access to assets could be difficult Copyright 2014 Quantum Business House

Family Trust Unit Trust Company 1 Company 2 CGT Tax Concession for Beneficiaries; “Flow through” Company hold assets and Unit trust hold shares Copyright 2014 Quantum Business House

Family Trust Unit Trust Company 1 Company 2 Bank Loan Loan: Div. 7A 7 year repayments rule Distributable Surplus New investment Copyright 2014 Quantum Business House

A New Company Unit Trust Company 1 Company 2 Bank Copyright 2014 Quantum Business House

 Rollover of units for shares (Sub Div.124H)  Then tax consolidation  Conditions: - Exchanging shares must be non-redeemable - Must hold the same proportion of units & value in share Copyright 2014 Quantum Business House

 Spouse not exposed to business risks  Family law issue (family home is an asset of marriage) – legal ownership vs. marriage entitlement  Capital Gains Tax – Main residence exemption  A discretionary trust Copyright 2014 Quantum Business House

 Risk minimisation - Business risks - Default risks - Personal guarantee - Relationship breakdown  Tax minimisation - Income tax and CGT (50% discount) Answer: a discretionary trust Copyright 2014 Quantum Business House

 Negative Gearing Issue – The owner must ensure there is other income to offset the loss created by the negative gearing. Copyright 2014 Quantum Business House

 Please use us as free business adviser  Free Initial Consultation  Packaged Services with fixed fee Copyright 2014 Quantum Business House

 Buying a business  Business Planning  Marketing  Raising Finance  Financial Management  Tax system and compliance issues  Risk management  Financial Health Check  Business Evaluation Copyright 2014 Quantum Business House