Points to consider in selecting the appropriate structure
A preferable structure should take into account the following factors:
- Tax – allows the splitting of income among family members where this is allowed;
- Tax Rate – minimise the family tax payable on profit from the business or investment;
- Flexibility – provide flexibility that allows changes without incurring restructure costs- for example, changes in the share of income among family members from year to year, transferring control to other family members without tax, impost;
- Realisation – maximise the after-tax gain on realisation of the business or investment;
- Asset Protection – protect the group profit and wealth from loss in the event of bankruptcy of any of the family members or exposure to litigation or other claims against any of the family members;
- Access – Allow access to group profit and accumulated wealth.
The importance of each factor will vary with the client’s circumstances.