Our client works in the IT industry. Let’s call him John. John’s business had a turnover of $7m and had 20 staff. John had been in business for many years and had planned on making some significant changes to his business in the next few years.
John’s previous accountant only offered year-end financial reporting, and he felt that he needed advice that was more proactive, so that his business could be better prepared and could capitalise on the developments that were underway.
We began by conducting a complete business health check, needs analysis and structural review. We found that two companies had been established for John many years before, and this arrangement had never been revisited to determine whether the structure was still appropriate for him.
Since John intended to sell one of the businesses in the next few years, we recommended a restructuring of both companies, which allowed better asset protection while also simplifying and streamlining the group. It also helped to reduce the capital gains tax liability on the eventual sale.
There were also problems with the class of shares that had been issued to shareholders of the company, who in this case were also employees. This posed a significant risk to the business and we advised on the steps that needed to be taken to rectify the problem. We reviewed succession planning principles with John, so he could begin putting into place a strategy to assist others to step up to leadership and ownership roles when required.
We undertook risk and estate planning with John to safeguard his assets and to prepare for the future. We identified a number of ways John could legitimately minimise tax and set out a schedule so that he would know the amount of tax due and likely due dates.
We also documented a step-by-step strategy of all the actions that were required so it was clear who was responsible for what, and when it needed to be completed by.
Finally, we completed all compliance work including end of year accounts and tax returns.
As a result of our comprehensive business review and our strategy planning, John was prepared for the eventual sale of the business. With our detailed planning, we were able to access the CGT Small Business Concessions and save over a million dollars in tax.
John is well on his way to a successful retirement with plenty of funds to be able to live comfortably and enjoy his passions for boats and cars.
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