Making partner co-owner in business?

Hey guys. Looking for a bit of accounting advice. All accountants I see in person just want you in and out as fast as possible

I have a 9-5 job earning around 52k a year + company car. I also have my own photography business which I do on weekends which has an income of around 60k a year (about 35k on paper when you include deductions). Last financial year I was hit with a 12k tax debt from the photography business.

My partner does cash in hand work at a cafe and will soon be having a baby. Once this happens my income will be our only income for a while. How beneficial will it be to have her as a co-owner and how is this done? Do I just tell my accountant to split the income to her name or do I need to inform the ATO?

If next financial year the business earns 50k, can I effectively "give" her 18k in earnings so we dont pay any tax on that (tax free threshold) and the remaining 32k will be added to my income?

Thanks for your help

 

What is the actual structure of your business at the moment? Is it a sole trader, trust, pty ltd company, etc?

Depending on which will determine what options are available and / or how easy or possible it is.

 

Hey DT

I am just a sole trader. I basically just have an ABN and that's it

 

That limits your options a lot.

Run it by the accountants on the forum or your own one, but maybe employ her as a "part time assistant" on 18k pa. You'll then have to pay Super and workcover etc

 

You should restructure the business into a discretionary family trust.

Depending on the business there may be capitals gains or tax to pay on the sale of the business to the trust, or if your accountant is... Then will not incur any tax on the transfer to the trust..

 

Separate question - The same time they brought in that $20K deduction policy, I thought they also implemented the abolishment of restructure costs? Can any accountants confirm?

 

Yeah. I would be interested in that ...

 

You guys may as well be speaking Chinese to me. I may be a decent photographer, but I'm a horrible business owner!

 

Talk to your accountant about setting up a discretionary trust. Make both you and your partner beneficiaries of the trust. You should be able to pass the psi rule, since as a photographer, no more than 80% of your income comes from one client.

 

LCK, as per your original post, if the accountants you are working with aren't providing you with the advice you seek, then you need to find another accountant.

 

What you can do is employed your partner as a "consultant" for your business and pay some "consulting fee".

Example, your photographic business is earning $36k next year. On your book, you hired your partner as a "consultant or assistant" to assist your business and pay your partner $18K. So for your partner this $18k is tax free. For your business $36k -$18k = $18k income only.

Talk to your accountant about income distribution.