Trading as a Trust or Business Entity

[Starcraftmazter]

How about.... a non-profit organisation.

Is it possible to set-up a non-profit organisation with you as the director, which donates money (profits from trading under the non-profit organisation's name) to causes of your choice?

 

[craft]

How about.... a non-profit organisation.

Is it possible to set-up a non-profit organisation with you as the director, which donates money (profits from trading under the non-profit organisation's name) to causes of your choice?

Yes - Establish a Private Ancillary Fund.

http://www.philanthropy.org.au/ancillaryfunds/pafs/index.html

 

[Gringotts Bank]

How about.... a non-profit organisation.

Is it possible to set-up a non-profit organisation with you as the director, which donates money (profits from trading under the non-profit organisation's name) to causes of your choice?

Sheesh.

 

[Starcraftmazter]

Yes - Establish a Private Ancillary Fund.

http://www.philanthropy.org.au/ancillaryfunds/pafs/index.html

But let's say that the causes are not at all tax deductible? I'm not concerned about the tax-deductibility of my contribution to such a hypothetical fund, so much as it being able to donate it's ongoing profits freely. These could be organisations in other countries, not charities or anything.

Sheesh.

What?

 

[craft]

But let's say that the causes are not at all tax deductible? I'm not concerned about the tax-deductibility of my contribution to such a hypothetical fund, so much as it being able to donate it's ongoing profits freely. These could be organisations in other countries, not charities or anything.

Nothing stops you donating your profits!!! If you want to run a fund that is exempt from tax on the earnings then you have to use the PAF mechanism and abide by the rules.

If you’re serious then a PAF is a great vehicle and all the information can be found in the link provided.

If you are not serious go and blow in somebody else’s ear

 

[Gringotts Bank]

organisations in other countries, not charities or anything.


What?

Sounds dodgy. Why the ?

 

[Starcraftmazter]

Sounds dodgy. Why the ?

Just thinking outside the box

 

[skc]

The company can buy some things (eg desks are ok, holidays are not), and gets the GST refunded.

On the issue with GST - would it be correct to say that if you register for GST (and do BAS quarterly) as an individual trader you can get the GST refunded on expenses as well?

 

[McLovin]

But let's say that the causes are not at all tax deductible? I'm not concerned about the tax-deductibility of my contribution to such a hypothetical fund, so much as it being able to donate it's ongoing profits freely. These could be organisations in other countries, not charities or anything.

It sounds like some half-baked scheme to funnel money out of the country tax-free. Can you send the profits overseas? Yes. And then what? Why not just set the company up overseas in the first place? Do you think the ATO will just allow you to send "charitable donations" to an unknown offshore entity? They'll be all over you like a fly on cow ****.

The ATO are not dummies, chances are anything you're thinking of has been tried thousands of times before.

 

[McLovin]

On the issue with GST - would it be correct to say that if you register for GST (and do BAS quarterly) as an individual trader you can get the GST refunded on expenses as well?

Yes.

 

[Starcraftmazter]

It sounds like some half-baked scheme to funnel money out of the country tax-free. Can you send the profits overseas? Yes. And then what? Why not just set the company up overseas in the first place? Do you think the ATO will just allow you to send "charitable donations" to an unknown offshore entity? They'll be all over you like a fly on cow ****.

Not at all, just that if you want to donate money to organisations which are not charities or charities in other countries so that your donation cannot be tax deductible, perhaps it is more prudent to set up a company that would donate it's profits to them, etc. That's what I was thinking.


Though now that you bring this up, is it indeed possible and beneficial to set up a company offshore? In some tax haven somewhere? Then you won't need to pay tax in Australia and you could use that company to make whatever purchases or other trades? And that includes running a legitimate company? (Assuming that the company will not need any physical presence so the country it's registered in is irrelevant).


Would anyone recommend any books I can read on this sort of stuff? (And I do mean books, not the Australian accounting law, corporations act, etc).

 

[craft]

Not at all, just that if you want to donate money to organisations which are not charities or charities in other countries so that your donation cannot be tax deductible, perhaps it is more prudent to set up a company that would donate it's profits to them, etc. That's what I was thinking.


Though now that you bring this up, is it indeed possible and beneficial to set up a company offshore? In some tax haven somewhere? Then you won't need to pay tax in Australia and you could use that company to make whatever purchases or other trades? And that includes running a legitimate company? (Assuming that the company will not need any physical presence so the country it's registered in is irrelevant).


Would anyone recommend any books I can read on this sort of stuff? (And I do mean books, not the Australian accounting law, corporations act, etc).

Confused. First you ask about structures for philanthropy now you are asking about structures for free loading. Do you have multiple personalities?

I reckon if you want to use a tax haven - then move there.

 

[Starcraftmazter]

I reckon if you want to use a tax haven - then move there.

Well I plan to at some point, but until then.... :

It would be a philanthropy structure in my view - but probably not one in the eyes of the authorities who determine what counts as such.

 

[McLovin]

Not at all, just that if you want to donate money to organisations which are not charities or charities in other countries so that your donation cannot be tax deductible, perhaps it is more prudent to set up a company that would donate it's profits to them, etc. That's what I was thinking.

But if you're a registered non-profit then what does it matter? You won't pay tax on your profits anyway.

Though now that you bring this up, is it indeed possible and beneficial to set up a company offshore? In some tax haven somewhere? Then you won't need to pay tax in Australia and you could use that company to make whatever purchases or other trades? And that includes running a legitimate company? (Assuming that the company will not need any physical presence so the country it's registered in is irrelevant).

You'll still pay tax in Australia. It will be considered a Controlled Foreign Company by the ATO. There are exceptions to the rule but generally, if you set it up in a low or no tax jurisdiction they will want their share.

Australian shareholders who have a controlling interest in certain foreign companies are taxed on their share of the foreign company's 'attributable income'. This includes passive income, such as income from investments (for example, rent, some interest, dividends and royalties) and certain sales and services income from related party transactions. This measure will generally not apply where the CFC's income is comparably taxed in certain countries or the income is derived almost exclusively from active business activities. Special anti-avoidance provisions may apply to specific benefits provided (directly or indirectly) by CFCs resident in certain countries, to their associated entities. That is, the benefit may be deemed to be a dividend paid to the recipient taxpayer and assessed accordingly.

http://www.ato.gov.au/corporate/content.aspx?doc=/content/46908.htm&page=6&H6

If this was America then you'd have far more loopholes to get through. The reality is the ATO does a pretty good job of protecting the revenue base.

There's no books (unless you want some of my old law textbooks) because the average punter on the street doesn't have enough cash to make playing around with tax jurisdictions worthwhile. Hire a tax lawyer; I hope you have deep pockets.

 

[Starcraftmazter]

But if you're a registered non-profit then what does it matter? You won't pay tax on your profits anyway.

Yeh, that's what I'm getting at - wondering whether that's possible to be considered a non-profit entity if the entity gives trading profits away to those groups or organisations chosen by the director.

You'll still pay tax in Australia. It will be considered a Controlled Foreign Company by the ATO. There are exceptions to the rule but generally, if you set it up in a low or no tax jurisdiction they will want their share.

If this was America then you'd have far more loopholes to get through. The reality is the ATO does a pretty good job of protecting the revenue base.

There's no books (unless you want some of my old law textbooks) because the average punter on the street doesn't have enough cash to make playing around with tax jurisdictions worthwhile. Hire a tax lawyer; I hope you have deep pockets.

Man this country blows

I meant books on company structures and company tax in Australia, etc. Something to give people starting a small business an idea of what sort of regulatory and tax torture they have to get through.

 

[McLovin]

Yeh, that's what I'm getting at - wondering whether that's possible to be considered a non-profit entity if the entity gives trading profits away to those groups or organisations chosen by the director.

I can't see why not as long as it's not making charitable donations to the Starcraft Fund...

Man this country blows

Why because it doesn't allow tax evasion?

I meant books on company structures and company tax in Australia, etc. Something to give people starting a small business an idea of what sort of regulatory and tax torture they have to get through.

For a small business tax is very simple. Money comes in, money goes out, tax office takes its cut.

http://www.cch.com.au/au/onlinestor...er-Tax-Guide-2012-50th-Edition&ProductID=9082

That's a pretty indepth book. Probably best to read it with the tax legislation handy.

 

[Starcraftmazter]

Why because it doesn't allow tax evasion?



For a small business tax is very simple. Money comes in, money goes out, tax office takes its cut.

http://www.cch.com.au/au/onlinestor...er-Tax-Guide-2012-50th-Edition&ProductID=9082

That's a pretty indepth book. Probably best to read it with the tax legislation handy.

Just all these rules and regulations....and why does business have to pay tax anyway? It's basically a double tax since employees get taxed on their income, I just don't like it. Imagine how prosperous Australia would be if people could just go out start and business and employ people and not have to do any tax, accounting, or any other government nonsense.

One thing I do not understand/have a problem with is GST. Let us say I run a business without a physical presence in Australia, selling IT services from US/Euro servers. Do I need to charge Australian customers GST? And if so, how can that possibly be justified?

Also thanks for the book recommendation, I'll be sure to get it.

 

[craft]

Just all these rules and regulations....

Also thanks for the book recommendation, I'll be sure to get it.

I can just imagine you reading that one cover to cover Starcraft.

sometimes you just gotta laugh.

 

[McLovin]

Just all these rules and regulations....and why does business have to pay tax anyway? It's basically a double tax since employees get taxed on their income, I just don't like it. Imagine how prosperous Australia would be if people could just go out start and business and employ people and not have to do any tax, accounting, or any other government nonsense.

How can it be a double tax when employee expenses are tax deductions to the company?

Without getting well OT and into a debate about the justification for taxation, I'll only say that I think it's absolutely necessary and creates a more level society.

One thing I do not understand/have a problem with is GST. Let us say I run a business without a physical presence in Australia, selling IT services from US/Euro servers. Do I need to charge Australian customers GST? And if so, how can that possibly be justified?

No. AFAIK, GST on services is dependant on where the service is performed. But then it also might come back to how you set the company up. If you are the only shareholder and you are resident in Australia then presumably you have set the company up overseas to get around paying GST. I'm sure there is some anti-avoidance rule in there to cover that.

Also thanks for the book recommendation, I'll be sure to get it.

That book recommendation was slightly tongue-in-cheek, but if you can get through it, all power to you.

FWIW, I'm neither an accountant nor a lawyer so this is just my own understanding based on experience. As usual, DYOR.

 

[Starcraftmazter]

No. AFAIK, GST on services is dependant on where the service is performed. But then it also might come back to how you set the company up. If you are the only shareholder and you are resident in Australia then presumably you have set the company up overseas to get around paying GST. I'm sure there is some anti-avoidance rule in there to cover that.

Doesn't it make sense to set up a company in the country you live though for convenience. In my case, the reason the services would be provided from other countries, is that it is much much cheaper to do so.

What you point out is what confused me about the GST rules I was reading up last night. They talk about business activity in Australia...well what the hell does that mean. Looks like people in my situation have to pay money to someone to explain to us what the government wants. Sounds unreasonable.