Disproportionate ownership of business’s is not uncommon, and the correct structuring for your business is critical in ensuring maximum tax benefits, flexibility for distributions, income tax and capital gains, not to mention long term asset protection for all the Partners involved.
A Hybrid Unit Trust is a favourable structure especially for Partners with disproportionate ownership. Let me give you an example of an allied health practice. There are 2 Junior Partners that own 10% of the Equity each and 2 Senior Partners owning 40% each. In this situation the Junior Partners are likely to be spending more hours on patients than in the management of the practice. So to distribute the yearly profit effectively and keep the Partners ownership in proportion to their interests the Hybrid Unit Trust is useful. This type of structure allows flexible yearly distribution, keeps the income tax and capital gains tax obligations with each Partner and also helps with each Partners cash flow.
Like every business structure, a Hybrid Unit Trust requires careful business and tax advice so it is important you talk to us about this to ensure it is the best structure for you. Tailored and strategic structuring will help you grow your business, protect your assets and build your financial security. If you would like your current or future business structure reviewed please call me on 03 8393 1020 to discuss your situation.
Pat Mannix, Partner, Paris Financial
Follow me on Twitter @mannix_pat
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