Has your business grown over recent years and you are not sure if you are operating in the right entity?

Are you worried about asset protection?

Is your average tax rate higher than 26%?

The Queensland Office of State Revenue has introduced an important exemption relating to small business restructures removing a considerable barrier to restructuring sole traders, partnerships and discretionary trusts into private companies.

Eligibility

This announcement could assist those small businesses who operate in one of the following structures:

  • Sole traders;
  • Partnerships;
  • Discretionary trusts

In addition to above, the following conditions apply:

  • Operating a business in Queensland;
  • The business turnover is less than $5,000,000;
  • Dutiable value of $10,000,000 or less;
  • Assets actively used to carry on business.

How this works

For example, a partnership operating a business with the following:

  • A turnover of $2,000,000 a year;
  • Operate within an industry with a high risk of workplace accidents; and
  • Owned by two individual partners 50/50.

In this example, this business would be able to utilise this opportunity to restructure into a company as this may provide them with more asset protection and potentially a lower tax liability as they would have access to a corporate tax rate. 

Additionally, if they were now operating in a company this may entitle them to apply for grants and subsidies more easily that can assist their business to grow.

In this example to be eligible for the exemption, both partners would be directors and shareholders of the newly incorporated company in proportion to their partnership ownership.

Opportunity

This announcement provides an unprecedented opportunity for businesses to be able to reassess if they are operating in the best structure. 

If you would like to discuss this new exemption please contact our office and we will be happy to assist.