Our client was a family that owned and operated a Perth based manufacturing family business. The family business employ...Read More
Our client was a family that owned and operated a Perth based manufacturing family business. The family business employed the parents and the children. The grandparents also had a similar background in the same business line.
As part of the yearly statutory review meeting with identified that the grandparents had lent the family business around $500k. This loan was injected into the business (and diverted away from personal assets) by the parents to ensure the ongoing viability of the business during a tough economic time. The loan was initially a short-term loan but has slowly become long term.
After looking at the families affairs we also noted that the parents had a private mortgage for around $1.2m. This was creating a large non-deductible (for tax) cost for the parents.
We devised a strategy where the loan from the parents to the business would be refinanced and paid back to the parents. The parents could then contribute their private family loan to the children directly and allow the children to use these proceeds to pay down their home (which was what the parents really wanted in the first place).
The net affect was that the parents where happier that the “early inheritance” went towards keeping the home secure, and the business owners had around $25k of interest that now became tax deductible.
The pro-active and engaged strategy for the family has also allowed a simpler budgeting by the parents
We were approached by a large family with a problem. Their current accountant had presented the family with a $250k tax...Read More
We were approached by a large family with a problem. Their current accountant had presented the family with a $250k tax bill with around 17 days to pay it.
We undertook a review of the yearly statutory affairs. The current yearly accounts were prepared by an accounting firm with an outsourced function in Malaysia.
The net result was that the family had around $200k of rental income shown in the accounts had a tax liability that was not payable until received. Further, after we interviewed different family members we identified that one of the properties in Mandurah (currently undeveloped) was a development property. As the property had fallen in value we were able to claim the fall in value as an income tax deduction. This strategy not only contributed to a complete elimination of the tax liability for the family for the current financial year but also allowed for the next years of income to also become tax free.
We were able to move quickly and correct the mistakes made by the previous firm. This meant that our newly appointed client was able to maintain their clean record of submitting tax returns on time but also assisted them significantly in not having to pay a large amount of tax in a short time period.
A family held a valuable residential block of land in Perth. The land was held in a large corporate group that was regi...Read More
A family held a valuable residential block of land in Perth. The land was held in a large corporate group that was registered for GST.
When the block was sold the selling entity was liable to pay GST on the land sold. The matter was investigated by the internal accounting staff, the CFO engaged a (new) law firm with a specific question as to whether GST was payable.
Sadly the answer came back in the positive. Our client was told they had to pay GST.
When the matter came to our attention we also considered the GST liability. Our lengthy history with our client let us knew the background to why this company was registered for GST and also the history for the GST registration of the company group.
We investigated the ability to remove GST grouping registration for this company. We then cancelled the GST registration for this entity as it did not need to be registered for GST.
The family saved $700k in GST as a result.
A family owned and operate two separate and successful real estate agencies with a large rent roll and a good sales team...Read More
A family owned and operate two separate and successful real estate agencies with a large rent roll and a good sales team.
The Office of State Revenue made a determination that both agencies were under common control. The net result was that, for payroll tax purposes, the family could only enjoy the “small business concession” once. At first glance it appeared that the issue was relatively simple and the OSR was correct.
We dug deeper and saw an opportunity. We made a submission and engaged in a lot of discussions with the OSR about the payroll tax issue. The end result was that we successfully demonstrated that the family had two distinct businesses, operating independently with separate control (within the one family group) and should be viewed as two different entities.
Following our submission, our client received a “payroll tax grouping exclusion”. They could enjoy the small business payroll tax concession twice. As a result, our client now receives two thresholds before applying payroll tax. The OSR’s determination was applied retrospectively and our client received a payroll tax refund of $42,000 in addition to the ongoing future benefit.
A family who owned a good technology business was having difficulty understanding its finances. To look at how current ...Read More
A family who owned a good technology business was having difficulty understanding its finances. To look at how current decisions today would affect the future was so hard that the family would simply “get on with it” and then look back at how the decision impacted the business.
Our practice became involved in the business. Over 4 separate meetings we assisted with the implementation of forecasting software that looked at both the profit impact and the asset impact. And we handed over control of the forecasting to the internal accounts division so the process became an imbedded part of the business rather then needing to outsource it.
The process for help our client was quite easy. So our client engaged us in the last two meetings to simplify their chart of accounts, clarify what their balance sheet meant, and incorporate dashboard reporting for key staff within the business unit. The dashboard reports separate out different revenue lines for different parts of the business so the staff are only looking at the numbers that affect them.
The business now has a clear understanding of what the future will look like for the business. And they have real time reports on the business they share with key staff.
A retail family with 5 stores approached us and we had a good conversation about their business exit strategy and plans....Read More
A retail family with 5 stores approached us and we had a good conversation about their business exit strategy and plans.
We prepared a business and family plan showing how we wanted the next 5 years to look like. Part of the plan included to be debt free in 5-years. We then looked at the practicality of trying to achieve that goal. This included calculating the monthly cash repayments necessary to be debt free. Sadly the business cashflow simply could not sustain that level of debt repayment.
When we discussed the hard truth with the couple and we had a difficult conversation. It became apparent that one spouse believed that the forward goals where simple fantasy. The other spouse believed with increased business profits the debt repayment schedule would be easily achieved.
So we reviewed and then restructured our clients bank loan positions. This meant that personal debt was repaid more quickly and we released some of the personal assets for the family used as security for the business. This restructure maximised the tax deductibility the family generally which then accelerated the debt repayment strategy. We also considered other strategies that included downsizing our clients family home and questioning their decision to educate their grandchildren at a private school.
The alternate plan gave our client an “easier” pathway to get what they were looking for. The alternate plan did not require future profits that may or may not eventuate. One spouse was able to focus on the primary plan which required increased profits. The other spouse was more supportive knowing they had a solid, achievable, exit strategy for their family business that would safely generate the lifestyle they were looking for.
A family owned a holiday home in London (around 2m pounds). When we undertook a review of their affairs we noted that th...Read More
A family owned a holiday home in London (around 2m pounds).
When we undertook a review of their affairs we noted that the property, held in a trust, had not paid the 10 year anniversary tax that is applicable in the UK. We then did further work and noted that there was no contemplation of death taxes that apply to the UK. We also noted that the evidence of trust ownership was scant.
Our correspondence with the engaged UK accountant was difficult. The UK accountant for our client did not appear to be aware of the current tax environment (or they simply did not like being questioned). We engaged our GGI UK office for our client, good advice was sought and the relevant tax returns were submitted.
The action by us meant that UK death duty (~ 40% of the asset) was avoided. This will allow the family in the future to keep on using the family holiday home even if the head of the family passes away.
A large family came to us for assistance with their normal statutory tax affairs. As part of our review we looked at the...Read More
A large family came to us for assistance with their normal statutory tax affairs.
As part of our review we looked at their trust deed. We noted their deed had a vesting date that was in the near future.
If no action was taken the family trust would have automatically shut. The cost of tax on the closure would have been around $6m.
We approached the lawyer for our client and arranged for the termination date to be extended until 2060.
The total cost of preventing the disaster was around $350 in legal fees.
The family is continuing to operate the trust in the way as intended.
A client was purchasing a large home in the country. It was previously used as a B&B and had around 20 acres on the...Read More
A client was purchasing a large home in the country. It was previously used as a B&B and had around 20 acres on the property with a few cows.
When we reviewed the purchase contract we noted that the contract included the words “GST farm exemption or GST going concern exemption”. The real estate agent proposed that our client register for GST and then “just cancel” the registration.
We explained to our client that “just signing” the clause and then cancelling the registration would trigger a GST bill in excess of $100k on purchase.
Our proactive approach stopped the client incurring a very large bill.
As a side issue: when the client approached the vendor on this GST issue the vendor deleted the clause and sold the property to our client without the GST strings attached.