Ah crap - I made a mistake. Even though I mentioned unit trust, I actually described the benefits of a discretionary trust. You don't get that flexibility with a unit trust, although it still holds that the income distributed keeps its character - so if you distribute non-Australian income equally to the unit holders, a person who is a non-resident wouldn't pay tax. For those that don't know, a unit trust is where people hold units in the trust and receive distribution in accordance to how many units they have; a discretionary trust allows the trustee more flexibility to determine who get what.
What I described about the CGT discount is still correct and the main reason why trusts are better over companies. On Tue, Dec 23, 2008 at 1:12 AM, Elias Bizannes <[email protected]>wrote: > Unit trust is taxed at the hands of the receipients, which gives you > flexibility in shuffling the tax burden - whereas a company is simply taxing > income equally and distributed to shareholders without consideration for > their individual tax situation. So for example, you could distribute > overseas income to your non-Australian business partner and avoid tax > legally (as it's a non-resident deriving non Australian sourced income; > under a company this would be taxed as it's a resident for tax purposes and > therefore the income is assessable) and you could distribute up to 6k to > several people in your family who don't work as that will be tax free due to > the personal threshold (again, under a company, that'd receive the post > taxed dividends). In terms of capital gain, this is included in an > individuals personal tax situation (CGT does not occur at a partner level > for example; it occurs at the marginal rate of tax at the individual level). > So going on the above example, you can distribute overseas gains to > non-Aussie residents to avoid paying tax, etc. > > Also, with CGT on individuals & trusts they get a better discount (50%) > than companies when calculating the gain (companies don't get the discount). > There's another method called indexation when determinining what the capital > gain is, but this only applies to assets pre 1999, and which is equal across > the board - so no difference between trusts and companies under that method. > > I wouldn't point this out for startups as it's more a case for longer term > businesses, but for completeness of knowledge, small businesses get a series > of discounts on CGT. > http://www.ato.gov.au/businesses/pathway.asp?pc=001/003/089/001/007&mnu=&st=&cy=1&mfp= > > I hope that helps. > > Elias Bizannes > Mobile: +61 412 338 508 > E-mail: [email protected] > DataPortability.Org - SiliconBeachAustralia.Org > Chat: Skype: elias.bizannes > [image: Linkedin] <http://www.linkedin.com/in/eliasbizannes>[image: > Facebook] <http://www.facebook.com/profile.php?id=501903123>[image: > Flickr] <http://www.flickr.com/photos/liako/>[image: > Twitter]<http://twitter.com/liako>[image: > del.icio.us] <http://delicious.com/liako>[image: Blogger]<http://liako.biz> > > > On Tue, Dec 23, 2008 at 12:26 AM, Simon Gilligan <[email protected]>wrote: > >> >> Hi all, if you were setting up a new company tomorrow, would you >> setup as a unit trust or company? Recent advice I've had is that a >> unit trust is a better vehicle with better tax control over capital >> gain. Is there any experience out there regarding this? >> >> >> >> > > > -- > Elias Bizannes > http://liako.biz > -- Elias Bizannes http://liako.biz --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Silicon Beach Australia" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en -~----------~----~----~----~------~----~------~--~---
