Many business owners decide to change their structure, often from sole proprietor to company or from partnership to company. But what happens with tax consequences?
When you sell a business, you would usually be up for paying income tax since the business has been sold or transferred its assets.
But when you change the structure of your business, ownership of the assets doesn’t change - so the ATO have a rollover process. This allows you to transfer assets as part of a restructure without having to pay income tax on that transfer. Yeah!
However, there used to be other tax consequences of transferring depreciating assets when undergoing a restructure. For example, a company transferring a depreciating asset (such as a ute/car, plant and equipment) to a sole trader could inadvertently create a dividend.
With the latest tax change in November 2018, there will no longer be any income tax consequences when your restructure involves the transfers of depreciating assets. This will automatically apply.
Remember, registered tax agents like Team Accounting can help you with your tax planning and compliance.
Your Opinions Wanted on Payment Delays
The ATO writes that invoice payment times in Australia are among the worst in the world, with invoices paid on average, 26 days late. This can affect your cash flow significantly.
The Australian Small Business and Family Enterprise Ombudsman has announced an urgent review of payment times, to measure how late or extended payment practices affect the cash flow of small businesses and family enterprises.
The Ombudsman wants to hear your experience with payment times and what is on your contracts to customers.
Fill out the survey out here: Payment times and Practices
Information gathered will be used to provide advice on how late and extended payment practices might be improved in small businesses.