Hi All, Looking for some Accounting and Tax thoughts on how best to set-up in regards to starting a Property Development Business. Some main points; ~ Thinking to set up a company structure and get my ABN timer started sooner rather than later. ~ most likely wont be looking to develop for about 3 years or so. Secondary questions; ~ Can I labour hire myself out through the company if I have my HR license etc, or other miscellaneous labour hire? ~ What am I limited to in regards to invoicing if I state it's a property developing business? do I need to even state what type of business I am conducting? Tax questions; ~ If I set the company up today, am I able to claim expenses I have already incurred in regards to education and due diligence around property developing? ~ Would I be able to purchase a work vehicle within the company when the business has no turn over at present? (to capture depreciation etc) Any other thoughts you think prudent for a green-skin such as myself to know before embarking on this project. Kind Regards, Arc
A company can employ its director or shareholder What is the idea behind the ABN timing? 1. I don't see how 2. yes but think of the consequences = FBT, Deductibility of expenses etc
Its highly possible you WONT have a property developmnet business esp where its a 3 year wait. A isolated or intended repetition wont necessarily be a busienss and if it was there could be some peculiar issues to ensure you are on top of. Generally most have a profit making intention. So what the difference between a busienss and a isolated activity. Not a lot. 1. The isolated one will defer the construction costs as work in progress 2. The business may have some costs to claim now....but without income that not much 3. The busienss will have trading stock. It sells when sales settle. the isolated method sells on contract 4. GST applies to both (seemingly) Tax advice is necessary. There may be no practical reason to pay salary (and then need single touch payroll etc) if there is no profit. paying wages in any other form is now non deductible unless under the PAYG withholding system Forget contracting.....And consider things like workers comp, super etc None of the course costs will be deductible. They are personal self education costs preliminary to an activity and would likely be a expense fringe benefit as they arent deductible. The vehicle is likely a fringe benefit, and not deductible without a logbook and for three years it would possibly be 0% deductible. And not depreciable / write off under small business rules. It doesnt seem like a business activity IMO. Its a isolated profit making INTENTION at best. An expected enterprise. Not an actual one. I would suggest you seek tax advice. Planning to spend money is a poor way to plan profits. An ABN at this time is not likely eligible....Its just an identifier. I often suggest deferring the ABN until closer to an activity.
Just talk to Paul to get it setup, that is what we did But yes, you will need the income for it to be worth the exercise!
Thanks @Terry_w,@Paul@PFI I could be mistaken, but I hear all the time about ABN needing to be active for 1-2 years before being considered able to apply for finance etc I see, a lot of false assumptions on my part, so I could only deduct costs of a course if it was undertaken whilst carrying out a business, instead of in anticipation of carrying out a business? And, the vehicle is only depreciable whilst also carrying out a business, so I would need BAS statements etc in place before that would be possible? Would I need to make repeated sales to then be deemed "carrying on a business", how would I go about setting up the ABN in lieu of that?
the ABN thing might be for low doc loans but for normal loans they will just go on the guarantors' income of 2 years financials for companies and trusts
I think you have a few misunderstandings. You want to learn how to ride in a rodeo before owning a horse. .I would be seeking personal tax advice as your grasp of the issues could result in concerns. An ABN can be issued for a isolated profit making activity OR a repetitive business. This activity must have commenced and be for a purpose needing a ABN. Some people are astounded to learn that a ABN can refused or caneclled by the ATO if found to be defectively requested. A ABN isnt a thing that says "i am in business"...The busienss is the evidence. eg Most lenders will shrug at a ABN and ask for information about activity, income etc. Just wanting to commence one day isnt a enterprise. Its like buying a car to learn to drive to then commence work as a carpenter doesnt make it deductible. The carpentry business is the activity. If a carpenter comes to me and says - i want to work and need a ABN they are likely ready. But a student isnt.
