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Soletrader and IPs?

Discussion in 'Accounting & Tax' started by Arashi87, 26th Jun, 2015.

  1. Arashi87

    Arashi87 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    101
    Location:
    Sydney
    Hey guys

    Can anyone tell me how structure soletrade with ips works and any benefits compare to individual ?

    Apparently my accountant told me few things but theyre all waiting on policy update anout the $20k claim on any small business entity. No one knows if soletrader can claim or not. She said there are few criteria : turnover $20k income, asset over $500k, taxable income under $250k, made gain in 3 years out of 5 years etc ....

    Does anyone know what the updates are or when government will release its news?
     
  2. dummies

    dummies New Member

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    22nd Jun, 2015
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  3. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

    Joined:
    24th Jun, 2015
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    Location:
    Philippines
    If your turnover is less than $2m then you will be an SBE and eligible for the $20k deduction.

    Re structuring it will be important to consider asset protection as you being a sole trader could expose your investment assets to your business risks.

    Want to transfer the asset to super later ? Move asset between parties with lower stamp duty ? Take advantage of the refinancing principle?

    All things to consider.
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
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    Location:
    Sydney
    I'm not quite sure what you are asking. You mention sole trader and Investment properties in the one line (highlighted) and then seek to compare this to personal ownership. Can you explain. Your understanding and explanation may indicate you ARENT eligible for the $20K small business write off if you aren't conducting a business. Owning IPs is NOT a business activity for most taxpayers.

    As previous posters has indicated if you meet the small business tests you may be eligible. The other tests (italics above) are the ones for non-commercial losses. Not the same issues.

    The Parliament are not opposed to approving this budget measure BUT at this time it isn't law. Based on what we have been told it has some catches. One of them allows a GST registered business to buy a single asset before 30 June and write off far more than $20K. Just bear in mind a $20K deduction may not save you a cent in tax. All it does is bring forward 4-5 years of deductions into one major deduction.
     
  5. BennEznElle

    BennEznElle Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
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    Location:
    Adelaide
    Paul if you are talking about the $20,000 deduction not being law yet, it received Royal Assent on Monday..

    http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5466

    As discussed above, this applies to small business not property investors (unless you are one of the few running a property investing business). The OP seems to be referring to claiming losses from the business against positively geared investment properties and this will be subject to non commercial loss provisions.