Legal Structures (Company/Trust/Partnership/Super)

Legal Structures
(Company/Trust/ Partnership/Super)

At Cyngler Kaye Levy Lawyers we have been advising clients on the best possible legal structures for their situation for over 20 years. Our lawyers have a wealth of knowledge and experience in Commercial Law.

A regualr review of your company/trust structure is essential.

Key factors that will assist you to determine of you are using the best legal structure

  1. Land Tax
  2. Income Tax
  3. Stamp Duty
  4. CGT – Capital Gains Tax
  5. Risk Management

Regularly reviewing your structure can alleviate bottlenecks later on.

Options to choose from when setting up a business structure

  1. Company
  2. Unit Trust
  3. Discretionary Trust
  4. Partnerships and Joint Ventures
  5. Superannuation Fund
  6. Franchising model

TRUSTS (Discretionary & Unit Trusts)

Trusts can be used in a variety of ways to distribute income to business partners and/or family members. Our experienced Business Lawyers can advise you which type of trust is best for your needs.

Recent changes that may effect your trust

Q. Do you know if your trust is up to date with the Bamford Decision?

Do you know if you can still distribute income out of your Trust the way you and your Accountant are planning each year?

You will need to checked if your trust is compliant with the new ruling in the Bamford Case and the Bamford Decision?

If your deed was drawn up prior to 30 March 2010 when the decision was handed down in the High Court of Australia in the Bamford Decision, then your trust may need to be changed so as to provide the maximum flexibility regarding future income and capital distributions.

Cyngler Kaye Levy can help you sort out this issue with your Trust Deed in a fast and easy manner that will help you and your Accountant in the future.

We can help you by:-

  • Checking your Trust Deed, and
  • Drawing up a Variation of Trust Deed to bring your Trust in line with the Bamford High Court decision.

Find out if your Trust is compliant by calling us on (03) 9500 1722

Q: Do I really need a lawyer to check the impact of Bamford on my trust? Can’t my Accountant do that?

Trusts can often be complex to understand, so it is important to engage an experienced Commercial Lawyer to help you work out whether your trust needs updating.

Check with your accountant, by all means, but it is likely you will tell you to go to a solicitor with experience in trusts.

Q. What is the Bamford Case and how does it affect me?

Bamford v Commissioner of Taxation [2009] FCAFC 66. “The Bamford Case” and the High Court of Australia decision in Commissioner of Taxation v Bamford [2010] HCA 10.

The main issues in the Bamford Decision revolve around the definition of “net income” and the ability of the trustee to a distribute beneficiary’s proportionate entitlements. This includes Capital Gains Tax.

We also note that the Government recently amended the Income Tax Assessment Act 1936 to allow only certain classes of income to be streamed to selected beneficiaries, namely Franked Dividends and Capital Gains Tax.

Due to the above we recommend that your trust deed be reviewed to ensure that it is both compliant and provides the greatest flexibility regarding future income distributions.

We can draw up a simple Variation of Trust Deed to bring your Trust in line with the new High Court decision.

PARTNERSHIPS

Essential things to know before entering into a partnership agreement

  1. A Partnership is not a separate legal entity, compared to a company, which is.
  2. Partners are liable for the debts of the partnership (this can differ depending on whether it is a general partnership or a limited partnership.
  3. Partners must lodge individual a tax returns. Partners are taxed at their appropriate tax rates depending on whether they are individuals, companies or trusts.
  4. Usually a Partnership can be for between 2 – 20 entities that commence a business together.
  5. Decision making can dependent on whether the partners are individuals, trusts or companies, and may require major decisions to be unanimous or an agreement by a certain majority.
  6. Capital contributions can depend on whether each partner will contribute equally or whether one party may be investing money whereas the other partner will provide required skills or labour.
  7. Distributions/Salaries – how will the profits be shared between the partners?
  8. Death/Disability – what happens if one of the partners die? Does the partnership agreement provide for succession.
  9. Deeds of Accession provides for what happens when new partners join the partnership.
  10. Dissolution of the partnership – what happens when you want to end the partnership.

Contact us if you are considering setting up a Partnership, or if you have concerns about an existing Partnership.

Succession planning is necessary if you intend to sell the business or transfer to another family member in the future.

If the business is growing, you may want to think about opening more stores/outlets using a franchising vehicle. See our section under Franchising for more information.

Please do not hesitate to contact our experienced Business and Commercial Lawyers on +61 3 9500 1722, request a cost estimate or email an enquiry.

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