Contact: David Pring
Deloitte
Partner Growth Solutiuons
(02) 9840 7311
Contact: Jane Kneebone
Deloitte Growth Solutions
Media and Communications
+61 (0) 3 9208 7389
Changes announced in the Budget for year end 2008/09 are likely to encourage small business operators and contractors to favour partnerships, trusts and other alternative structures over the use of companies, according to Deloitte Tax Partner David Pring.
“This year’s changes build on the changes concerning tax rate reductions which were announced in last year’s Budget,” he said.
In the past, there has been an incentive for small business operators and contractors to incorporate due to the significant differential between the personal and company income tax rates. As this differential has now been narrowed further, taxpayers have fewer reasons for choosing a company structure particularly given all the hassle and cost involved.
Following the changes to personal tax rates, a husband and wife operating a small business should only consider incorporating where their combined income exceeds approximately $360,000 for 2008/09.
On the other hand individual contractors are unlikely to incorporate where their incomes are less than $180,000.
When choosing an appropriate structure in which to operate a business you should always consider the following golden rules:
- profit repatriation
- asset protection
- wealth accumulation.
The changes announced may give some small business operator’s and contractors good reason to focus merely on asset protection and wealth accumulation in preference to profit repatriation.
NB: See our media releases and research at www.deloitte.com.au
|
