ABN question

Don't know if I'm in the right place for this question? I'm paying GST on my ABN I have with my ride sharing job. I have another start up business and don't want to pay the GST so need to apply for another ABN under a partnership structure with my wife. I'm told I just have to write out an agreement stating the structure and can allocate income between us at tax time. Income is below $75k at present.
Are there any other implications I should be aware of.

 

Joint and several liability - you with both generally be responsible for the debts of the partnership. This can be a major issue if you get sued.

Depending on the business, a company could be worth considering.

 

Thanks JDM. Does a partnership have the same liabilities as a company ? ie are my assets at risk if there are legal proceedings etc?

 

No and Yes.
Not only your assets but the other party's assets will be at risk.

A company is a separate legal person - separate from its directors and shareholders. A partnership is not a separate legal person but just 2 or more legal persons getting together to make money so each is liable for the whole debts. If one partner does something silly, you could be exposed.

This is why I have never set up a partnership for anyone as it is the most dangerous 'structure'.

 

If you have a partnership and it conducts a enterprise it would have a different ABN (and TFN). Your ABN cannot be used for partnership activities. If you do then the GST and tax issues may sit with you alone.

I would take warnings about partnerships seriously. It depends what the endeavour is of course. Partnership agreements DO NOT need to be in writing. And many clauses you write may be ineffective anyway (ie no liability, share that is not 50% in some cases etc).

If the income is personal services income you would be in breach of tax law using a partnership. I would seek tax advice.

 

Thanks everyone. Maybe my only other way is to put it in my wife's name?

 

There are plenty of other ways, not just one.

 

Alienation of income earned by a person to another name is potential tax evasion.
I would seek advice.

An ABN is NOT for a person or entity. They merely are issued it as the legal capacity rests with a person or entity. An ABN is for an enterprise. A taxpayer can have multiple enterprises and multiple ABNs. One enterprise can be subject to GST and another not.

 

I was of the idea that I'm only allowed one ABN with which I can undertake multiple enterprises. But not multiple ABNs.
So I can apply for another ABN and run my other non GST business from it?

 

You can only have 1 abn i thought? Why not look into separate entities?

 

One ABN but multiple branch ABNs for each activity. eg Dr Smith can have three:
1. Doctor (Supplies GST free but claim GST on practice costs)
2. Developer (Buy land, develop and sell)
3. Teaching at university twice a year....This one could be GST free as an example.
Dr Smith separately accounts for each activity (and should because they are not the same activity)

Call the Australian Business Register and request additional branch ABNs....They end in three digits eg Doctor Smith

12 345 678 910 / 001
12 345 678 910 / 002
12 345 678 910 / 003

An ABN reflects an enterprise NOT a entity. A TFN reflects the entity. A branch can also charge the parent entity in some cases. eg Fees can be charged by the practice to Dr Smith for staff time and costs in doing his personal bookwork etc for the dev. GST may be added and would be creditable to one branch and paid to the ATO in the other.

GST branches explains and includes the application form

 

Ah, didnt know you could do that, that's cool

 

Thank you Paul.

 

Just reading the tax office info on branches.
Am I understanding this correctly that I can't avoid the GST on the branch alone and I can operate the branch independently of GST up until the combined income is over the threshold ?


Effect on GST turnover
An entity must register for GST when its GST turnover exceeds certain thresholds. When an entity operates with a branch structure, these thresholds apply to the entity as a whole, including the turnover of any branches.

 

If you dont understand it seek tax advice. Entity structure may be more the issue here.