Your structures. Not your homes, not your warehouses, not even the old hay shed that's near to falling over. They are the legal entities you use to operate your businesses and to accumulate your wealth. They are companies, partnerships, trusts of all sorts, self-managed superannuation funds or combinations and variations of all of these.
Successive governments have tended to 'fiddle around' with their treatment of business structures. Some of these fiddles have been positive (think small business CGT concessions or dividend imputation) and some have definitely made our life, well, more challenging (think Division 7A, changes to trusts and the like.)
One thing is almost certain when it comes to business structures. That is, any structure set up today is most likely to be different to the optimal structure for you in say ten, twenty or thirty years' time. This is not only because of the inevitable government tinkering that will occur, but also because by then the structure will probably have served its useful life and will no longer meet the changed objectives of the owners. So when a government announces a 'positive fiddle' we are usually looking for opportunities for our clients to take advantage and maybe rid themselves of some burdensome entity that is being tolerated, much like that old hay shed.
During the 2015/2016 budget the Abbott government announced improvements to the small business CGT roll-over provisions. These became law and effective from 1 July 2016. The purpose of the law is to allow small business to more easily restructure into a more appropriate structure without running into some of the usual impediments such as Division 7A deemed dividends and crystallizing unrealised profits.
Further effective 1 July 2016 the NSW State government removed stamp duty on non-real property business asset transfers. This has been done as part of the implementation of the GST introduction program (16 years late, but better late than never we think!)
We are not saying that these changes are the panacea to all our structuring issues, but they do open up opportunities that previously had some serious road blocks in front of them. So, much like how the better tax treatment for fodder storage allowed some farmers to bulldoze the old hay shed and tax effectively put up a new one, it could be that these recent changes could allow you to remove that thirty year old company that's on its last legs and move onto something now more appropriate.
The rules are unfortunately complex. However, if you think that this could relate to you, or someone that you know, please give your Johnsons MME contact a call because we can help you to better position your business now and into the future.
Gary Essex is managing partner of Johnsons MME. Gary is a member of the Institute of Chartered Accountants of Australia and holds a Bachelor of Commerce from the University of Melbourne. Gary deals with a wide range of clients, including primary producers, transport operators, builders, motor vehicle dealers, irrigation operators, estate and stock & station agents, licensed premises as well as investor clients.
Gary has been involved in negotiations with Treasury and senior ATO Officers regarding various taxation issues including complex CGT matters for both small and large businesses alike.