Get structured - best not to build on a foundation of sand

The whole area of structuring is full of opportunities that are seldom effectively utilised.

What do we mean by structuring? 

It is, in the least technical terms, the arrangements (Company, Partnership, Trust, Joint Venture, etc) through which you conduct your financial affairs.

Best not to build on a foundation of sand!

What you want is a structure that maximises asset protection and flexibility in achieving your commercial and personal objectives while minimising the taxation required to be paid – be that income, capital or other. Not only this, but you want maximum access to relevant taxation concessions.

This much is pretty logical. What is not so clear is how you can be sure that you are getting the advice that you need? Or even, that the advice you have had and may have paid well for is correct?

The answer is to find a suitably qualified professional. Look for:

  • Chartered Accountant
  • Specialist university qualifications in Taxation
  • Membership of the Taxation Institute of Australia
  • Suitable work experience

While there are many designations around, seeking the help of a professional with the above qualifications will substantially increase your chances of receiving appropriate advice.

Go further and ask for references. Have the advice checked for a second opinion and make sure your advisor spends enough time explaining the advice to you. If he cannot get you to understand the advice, then he probably doesn’t understand the advice well enough himself!

It is no secret that wealthier Australians make considerable use of a variety of structures, including various types of trusts, companies and self-managed superannuation funds in order to maximise security whilst minimising tax implications. 

What we do for our clients is ensure that the structures through which they are operating are transparent and understood by them. We ensure they have a diagram of what their structure is and that they have a written description of how it operates – most people we come across are using structures they don’t understand, for reasons that are not clear to them or their advisors!

Questions

Ask yourself:

  • Do I have a diagram of my existing structure(s)?
  • Do I know how it works from an asset protection, commercial flexibility, income tax, capital gains tax, other taxes and tax concession point of view? That is, would I be able to explain the structure to someone else who is not familiar with it?

Ask accountant:

  • What is my current structure(s)?
  • Would you please provide me with a diagram of my current structure?
  • Would you please write down, in the form of formal tax advice, what my structure is, why you are advising this structure and the benefits of this structure to me?

This article was taken from the book 'Your Money, Your Choice', written by Brett Kelly. For more information on Brett, please visit his website: www.brettkelly.com.au