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Family business dividend rules

A decision by the ATO to clam down on dividen access share arrangements is is adding to the pressure the ATO is currently putting on family businesses.  The tax office has started paying more attention to family groups within the last couple of months, which means those SME’s have had to spend more time on paperwork.

Although use of dividend access share arrangement is not widespread, it can be used by family business to distribute dividends where a particular ownership structure is impeding the flow.

One solution to the problem of complex ownership structures could be some modification of some tax consolidation rules.  These allow for a group of companies to be treated as one payee for tax purposes.  If they have one share holding parent company, transactions within that group are ignored.

Posted on 10 September '12 by , under Business.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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