A person may purchase a real estate agency in his or her own name. As things go well, the owner may then want to share the profits with their spouse to reduce tax. Later, the owner may want to take on partners or gain the benefit of a family unit or service trust.
Every time you change the business entity and structure, however, you change ownership. This means the tax man takes his cut before you’ve even sold your business.
If you started your business from scratch, then your ‘cost base’ may well be nil. If you later sell or transfer the business, to say, your Family Trust, then you may pay Capital Gains Tax on virtually 100% of the value of the business – often as calculated by the Tax Office. This can have VERY COSTLY results. Your decision made today may affect the future value and flexibility of the business.