Steven is self-employed in the civil construction earth moving industry and he is operating as a sole trader….

Steven is a Single Dad

Steven is single and has one dependent child. His average annual net profit amounted to approximately $90,000 per year.

Profit Fluctuations

Steven’s net profit can fluctuate widely throughout the year with lows of $60,000 and spikes up to $280,000 per year, depending on the number of contracts available during different seasons.


1. As Steven was single there was no opportunity to split income, thereby having no control of marginal tax rates which could vary from 34.5% to 47%.

2. Difficulty in predicting income when calculating varying quarterly PAYG installments.

3. Cash flow issues associated with PAYG installments,
For example; Steven could end the tax year having a greater or lower tax liability than was estimated for PAYG installments.

Steven acted on our advice

Steven restructured his business operation into a family trust with a variation, a corporate beneficiary was added.

A corporate beneficiary helped to level the income and maintain a level marginal tax rate and associated cash flow.
When profit was high a portion is distributed to the corporate beneficiary with a tax rate of 30%.

An actual money transfer occurred with the distribution to the company and company tax was paid. In a low income year no distribution was made to the corporate beneficiary and, depending on his income threshold, a dividend would be paid from the beneficiary company to Steven which had imputation credits attached, effectively making it tax paid income.

Small Business Statistics and Activity In Australia

Each year, the Australian Small Business and Family Enterprise Ombudsman (ASBFE ) release a statistical report that helps "...create a picture of small business in Australia and its contribution to our economy." The ASBFE says "Small business and family enterprise in...

Starting a business and don’t know where to start?

Need a Business Startup Checklist?Starting a businessOur Business Start-up Pack will get your business established, in most cases, within 90 minutes. The business start-up pack includes:Tax planning and adviceIdentifying the business structure best suited to...

Starting A Business? Do I Need A Plan?

When planning to start a business, there are many things to consider: some financial, some conceptual, and others just plain practical. In the 80's and 90's we could count on a certain percentage of clients working as employees, transitioning to some form of business....

25% Tax Rate FY 2022 – More Reasons To Set Up A Pty Ltd Company

From 1 July 2021, the new company tax rate in Australia is 25%. If you intend to start a business, a company may be the best business structure to start with. For some business start-ups, liability protection is important. However, the new company tax rate of 25% is a...

Business Partners Non Related Parties Case Study

BUSINESS PARTNERS CASE STUDY THE PARTNERS ARE NON RELATED PARTIESJoe and Adam are plumbers who have both worked together on various construction sites....Long Term Friendship Joe and Adam have been building a great long term friendship over the years and decide to...

Tax Benefits of FBT For Companies and Trusts

Fringe Benefits Tax (FBT) legislation was introduced in 1986 to capture tax revenue on certain employee "non cash" benefits. For example, FBT will capture the private use by employees/directors/associates of a “company” non-commercial vehicle. However, tax savings can...

Loss Back Tax Offset For Companies – 2021

The new Loss Back provisions for companies commences with lodgment of 2021 tax return. The Loss Back provisions allows a company to offset a current year loss against a previous year profit, generating a refundable tax offset for the current year for tax paid in a...

Stories From The Trenches – Business Principles

Today I want to share a brief story of a young couple operating a business. It is a real story about real clients that highlight planning principles in small businesses. Case Study Some years ago, a young couple operating a business asked me to look after their tax...

How to register a Pty Ltd company

When thinking about how to register a Pty Ltd company, proprietary (Pty) means privately held and Limited (Ltd) indicated a limitation to liability of the shareholder(s). So a Pty Ltd company is a privately held company which is limited by shares. Pty Ltd companies...

Tax Benefits of Using a Pty Ltd Company For Your Business Structure:

A tax benefits of using a company as a business structure is Franking Credits. How do they work? When a company makes a profit, it pays tax at 27.5% (small companies tax rate). Company tax paid is recorded in the company's "Franking" account. When shareholders receive...

Pin It on Pinterest

Call Now ButtonCall us