Definity Legal in Mascot, New South Wales | Lawyer & law firm

Definity Legal

Locality: Mascot, New South Wales

Phone: +61 2 8090 2759

Address: 19 Horner Avenue 2020 Mascot, NSW, Australia

Website: http://www.definitylegal.com.au

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25.01.2022 STRUCTURING FOR THE FUTURE PART 4 OWNERSHIP BY COMPANIES Companies are most often used as a structure for business rather than for investments. ... The main benefits of the company structure are: the tax rate on profits is 30% and the company can retain profits within the business at tax rates lower than the highest marginal tax rate of individual shareholders; a company is a separate legal entity from its shareholders. This separate legal existence provides companies with the ability to enter into contracts, sue and be sued just like a natural person; the liability of the shareholders is limited to the amount (if any) unpaid on their shares in the company. Therefore, the company structure offers some protection for shareholders if the business fails or is sued. However, in certain circumstances the directors of the company, who are not necessarily the shareholders, can be held personally liable for debts of the company and the corporate veil that often isolates directors can be pierced, leaving them exposed; on incorporation a company has perpetual existence and is not affected by such things as the death of a shareholder or director; CGT rollover relief and small business CGT concessions are available if special conditions are met. However, if the company is used as a purely investment vehicle, it is unlikely that the assets will qualify as active assets for these purposes; and a company can distribute profits by paying a dividend, but there is limited flexibility when paying these, i.e. dividends can only be paid to the companys shareholders. However, the following disadvantages of adopting a company structure may make it not the most appropriate vehicle for acquiring investments: a company is not able to obtain the benefit the 50% CGT discount available to individuals and trusts on the sale of investments, which makes this structure unattractive for investments in assets that are expected to appreciate in value. However, for investments that are expected to generate a significant income stream, but not appreciate significantly in value, the company may represent an appropriate structure. This is because the income will initially only be subject to the relatively low flat corporate tax rate of 30%; the costs of establishment and ongoing administration of a company can be high as the legal formalities for the operation of companies are more onerous than for other structures; losses can only be offset against future income of the company; and directors are often required to personally guarantee lending by the company.

24.01.2022 STRUCTURING FOR THE FUTURE PART 3 OWNERSHIP BY PARTNERSHIPS A partnership is a relatively simple structure and costs to set up are fairly low. A partnership (as opposed to holding an investment in joint names) is a separate entity for taxation purposes and as such requires its own tax file number and tax return. However, a partnership does not pay tax in its own name, but must distribute income to the partners. ... Partnerships offer limited distribution flexibility as any income derived has to be split between the partners according to the partnership agreement. It should be mentioned that holding a property as joint tenants or tenants-in-common or holding shares in joint names is usually not considered to be a partnership. There is no risk protection in a partnership and the assets of either partner may be subject to a claim by a creditor as all partners are jointly and severally liable for all partnership debt and there is unlimited liability. This means that one partner could become personally liable for all the debts of the entire partnership. Other disadvantages include the facts that each partner can bind and obligate all other partners and that there is no flexibility for retention of profits within the partnership as profits are distributed to each partner.

23.01.2022 Welcome to Definity Legal! On this page you will find some useful tips about property, commercial and corporate law issues that may affect you and your business. We look forward to your comments, suggestions, calls, emails.

21.01.2022 WHAT IS YOUR PROPERTY WORTH? Thinking of selling or buying a property and wondering what it is worth? As a starting point you may wish to use the following FREE resources: https://property.value.realestate.com.au/ - enter the details of the property and you will receive a free report designed to help you understand the potential value of the property by providing a view of the recently sold properties in the area and those currently listed for sale as well as median propert...y prices and a snapshot of the areas supply and demand. http://www.onthehouse.com.au/ - enter the address of the property and you will see the range-based guesstimated value of the property, its listing history and most recent sale results as well as comparable listings for sale and recent sales in the area. If youre selling the property, you may benefit from this presentation checklist which will help you maximise the value of your property: http://sellingguide.realestate.com.au/presentation/checklist Happy selling or buying (or both)!

17.01.2022 STRUCTURING FOR THE FUTURE PART 2 OWNERSHIP BY INDIVIDUALS The most common and simplest investment vehicle for individuals to hold investments in their own name. ... The advantages of this ownership structure are: no set up costs and easy management as income and capital gains are included in the individual's own tax returns; easy administration as there is much less paperwork in comparison to other structures; tax advantage when the investment is negatively geared and deductions can be claimed against the individuals other income; and 50% capital gains tax (CGT) discount is available on sale of investments which were owned for at least 12 months. However, this ownership structure has the following disadvantages: assets held by an individual offer no flexibility with the distribution of income; the individuals are subject to tax on the whole of their income (including the investment income) at their personal marginal tax rate; the liability of individuals is unlimited and there is almost complete lack of asset protection for accumulated investment wealth, i.e. creditors will have a right of claim against both the owners investments and personal assets (including the family home); where the individual personally carries on activities that carry a high degree of inherent risk, such as medical, accounting or legal professionals or directors of companies, the whole of the individual's investment wealth could be exposed to professional indemnity or public liability claims negatively geared assets held by an individual will eventually become positively geared, resulting in an increased tax liability over time. The same advantages and disadvantages apply to assets held jointly. It should be mentioned, however, that the ownership by an individual has significant advantages when it comes a principal place of residence, as in this case the property will be exempted from land tax and from capital gains tax on sale.

14.01.2022 DIVORCE AND PROPERTY SETTLEMENTS There are many good reasons for former spouses to legally formalise their divorce property settlements. One of those reasons is that they may be exempted from paying stamp duty which is otherwise payable on the transfer of title to their real property, cars and certain business assets. They may also be exempted from paying capital gains tax when they transfer the home or other assets they owned together to one of the spouses. These exemptions,... which normally represent savings of tens and hundreds of thousands of dollars, will apply both to married couples and to partners of a de facto relationship. NSW Stamp Duty Part 7 of the Duties Act 1997 (NSW) details the exemptions from payment of stamp duty for certain transactions, including the transfer of property title between former spouses or between former spouses and their children. The transfer of the property of a trust to one of the spouses may also be exempted from stamp duty. Importantly, in order to be entitled to the exemption, the parties must enter into a legal document which is recognised under the Act, such as: orders made under the Family Law Act, including consent orders; and a financial agreement. Capital Gains Tax To prevent the tax laws from penalising people who are already going through the emotional trauma of separation, they offer some CGT relief in marriage breakdown situations. In particular, in the scenario where an asset is merely transferred for no payment (as opposed to a sale where cash or other proceeds are received), there are specific 'marriage breakdown roll-over' provisions, which will automatically operate to defer the payment of CGT that would otherwise be applicable in ordinary circumstances. There are generally two types of roll-overs available. One applies to the transfer of a CGT asset that is owned by an individual to their spouse. Another applies to the transfer of a CGT asset from a company or trustee of a trust to a spouse. However, note that no roll-over is available if the asset is transferred from an individual to an entity. Therefore, if the recipient spouse wishes to further transfer the asset from their own name to say, a discretionary trust, then CGT and stamp duty may be triggered, which could effectively undo some or all of the benefits of the roll-over. To that end, if the asset is already held by an entity, the spouse to whom the asset is transferred may consider assuming control over and/or taking the ownership of that entity, rather than transferring the asset. Nevertheless, in those circumstances, other issues (such as stamp duty) will need to be considered. Contact us if need advice on the matters raised in this post or on structuring the ownership of your assets generally.

14.01.2022 STRUCTURING FOR THE FUTURE PART 5 OWNERSHIP BY TRUSTS Trusts are a popular investment structure, but are often poorly understood.... Briefly, the trust is formed by executing a deed which documents the establishment of the trust. The trust is operated by a trustee, which can be either an individual or a company. The trustee is responsible for all decisions associated with the management of the trust, including distribution of income and capital. The potential list of beneficiaries of the trust, i.e. those to whom the income and assets of the trust can be distributed, can be unlimited. In a typical family trust scenario they are usually the spouses, their children and any related entities (any companies of which the specified beneficiaries are directors or shareholders). A trust can distribute income and capital gains in accordance with the trust deed. A trust can also retain income. However, this is not desirable because if that income is taxable, then tax is payable at the top marginal rate plus the Medicary levy. One of the disadvantages of the trust structure is that a trust cannot distribute income or capital losses (eg. rental losses or losses from the sale of an investment). However, losses can be carried forward to be offset against future income of the trust. There are 3 main types of trusts used for ownership of assets: discretionary trust; unit trust; and hybrid trust. We will discuss them in our next posts.

13.01.2022 TIPS TO ASPIRANT PROPERTY BUYERS In a hot property market the competition to secure a property you like is often intense, involving heated bidding at an auction or numerous competing offers being made in case of a private sale. To avoid being gazumped or missing out on the property you want, aspirant buyers should familiarise themselves with the steps involved in buying real estate. Some of the tips that will allow you to act quickly once you find a property you like are as f...ollows: 1. Do the market research of the areas in which you intend to buy a property and find out the price range for the type of property you want in those areas. 2. Have your finance pre-approved. Flash Finance can assist you in this regard. 3. Ensure you can pay a 10% deposit by either a bank cheque or deposit bond so that there is no delay in attempting to exchange contracts on a property. 4. Obtain a copy of the sale contract from the vendor or its real estate agent as soon as possible and have it reviewed by your solicitor. If instructed, Definity Legal will act promptly to advise you on all aspects of your property purchase. 5. Consider ordering building and pest inspection reports and, if applicable, a strata inspection report. We can advise you which reports to obtain in your circumstances and can direct you to the providers of those services. 6. Negotiate firmly with the vendor or its real estate agent. When youre ready to make an offer, put an offer in writing as the law requires real estate agents to present all offers to the vendor. 7. If you are advised that other offers have been made, ask for evidence. However, if you are certain that you want a particular property, be ready to possibly increase your purchase offer to the vendor. 8. If youre biding at an auction, know the upper limit of your budget and the maximum price youre prepared to pay for a particular property. 9. Be aware that the vendors are not generally obliged to sell to any specific person and can change their mind at any time before exchange of contracts takes place. Vendors may not necessarily sell to the highest offerer. Therefore, be ready to exchange with a signed copy of the contract and arrange for your solicitor to follow through on exchange.

13.01.2022 STAMP DUTY ON YOUR BUSINESS With different stamp duty regimes applying in each state, one of the considerations for registering your business entity should be the stamp duty which the purchaser of your business will have to pay when you eventually decide to sell it. This is because the absence of stamp duty translates into a higher sale price you can get for your business. With the NSW Government once again deferring the abolition of duties on sale of non-land business assets, shares and units, it makes sense to look at other states with more favourable stamp duty outcomes to register your business entity. Talk to us to see if this can be done in your circumstances.

12.01.2022 DEPRECIATION - A USEFUL TOOL TO MAXIMISE THE VALUE OF YOUR INVESTMENT PROPERTY Don’t underestimate the value of the depreciation deductions for your investment property. Depreciation is a valuable tool you can use to improve the cash flow on your investment. The depreciation tax breaks are higher on newer properties, but are still available on ALL investment properties no matter how old the property is. If you own an apartment or townhouse in a strata block, you may even be ...able to claim depreciation on your share of the common property, based on your unit entitlement. The example in the article below shows that having purchased a 3-bedroom apartment for $450,000, in Year 1 you can claim a tax deduction for depreciation of about $13,000. Depreciation in commercial properties can be even higher: if you purchase a $750,000 strata office, then your deprecation tax deduction in Year 1 can be in the vicinity of $40,000: http://www.bmtqs.com.au/tax-depreciation-schedule *This information is provided for general purposes only and does not constitute an advice. Want to know the exact the amount of the depreciation deductions that apply in your case? Then you need to get a depreciation schedule. If you require assistance with this, let us know.

10.01.2022 DEPRECIATION - A USEFUL TOOL TO MAXIMISE THE VALUE OF YOUR INVESTMENT PROPERTY Dont underestimate the value of the depreciation deductions for your investment property. Depreciation is a valuable tool you can use to improve the cash flow on your investment. The depreciation tax breaks are higher on newer properties, but are still available on ALL investment properties no matter how old the property is. If you own an apartment or townhouse in a strata block, you may even be ...able to claim depreciation on your share of the common property, based on your unit entitlement. The example in the article below shows that having purchased a 3-bedroom apartment for $450,000, in Year 1 you can claim a tax deduction for depreciation of about $13,000. Depreciation in commercial properties can be even higher: if you purchase a $750,000 strata office, then your deprecation tax deduction in Year 1 can be in the vicinity of $40,000: http://www.bmtqs.com.au/tax-depreciation-schedule *This information is provided for general purposes only and does not constitute an advice. Want to know the exact the amount of the depreciation deductions that apply in your case? Then you need to get a depreciation schedule. If you require assistance with this, let us know.

06.01.2022 STRUCTURING FOR THE FUTURE In this series we will discuss the importance of adopting the right structure for your investments and will analyse various ownership structures with their advantages and disadvantages. As there is no one size fits all solution available, will also look at some case scenarios as we go along. Feel free to interrupt and ask any questions. PART 1 EVALUATING THE MOST APPROPRIATE STRUCTURE ...Continue reading

02.01.2022 STRUCTURING FOR THE FUTURE PART 5A - DISCRETIONARY TRUSTS Most family trusts are established as discretionary trusts. A discretionary trust differs from other trusts in that the beneficiaries under the discretionary trust do not have a fixed entitlement or fixed interest in the trust funds. Instead, the trust deed of the discretionary trust generally defines the potential beneficiaries of the trust very broadly, and the trustee is then given complete discretion to determine ...Continue reading