GST - hypothetical question

[h8dk97]

Hi there,

Just a hypothetical question about GST, and my apologies, it’s not exactly related to real estate but I think would be interesting to discuss.

There are some industries where GST may easily make your business not competitive, these 10% on top of your already small margin will make it very hard to sell the stock. And it’s quite easy to get $55K turnover per month once you start seriously advertising your business. My thoughts so far are: 1. have two businesses, each business would have a different director i.e. one husband and the other one wife (but that’s not enough anyway). 2. Setup different companies of which one person is director but they are separate legal entities.

Would be good to hear other people’s opinions, is it worthwhile, any experiences?

Thank you very much.

 

[stickysandwich]

hi there

don't get it!!! please explain!!! what would be the benefit of the 2 directors??

stickyS

 

[h8dk97]

hi there

don't get it!!! please explain!!! what would be the benefit of the 2 directors??

stickyS

Sorry if I wasn’t very clear. Example: once one business made just below $55K (not profit, just turnover), then another one takes over. But with low margins this doesn't really make sense, profit from $110K turnover may be only about $15K. I'm just curious if other people had this sort of problem and how they would approach it.
Thank you.

 

[Aceyducey]

I'd look at modifying the business so I could justify higher margins.

Change the competitive field from price to another factor - quality, service, exclusivity, etc.

Alternatively I'd sell the business and buy one in an industry where the GST didn't make me uncompetitive.

Cheers,

Aceyducey

 

[h8dk97]

Thanks Aceyducey. These are valid points yet I would be interested to know if people see some other possibilities.

 

[Sunfish]

Hi there,

Just a hypothetical question about GST, and my apologies, it’s not exactly related to real estate but I think would be interesting to discuss.

There are some industries where GST may easily make your business not competitive, these 10% on top of your already small margin will make it very hard to sell the stock. And it’s quite easy to get $55K turnover per month once you start seriously advertising your business. My thoughts so far are: 1. have two businesses, each business would have a different director i.e. one husband and the other one wife (but that’s not enough anyway). 2. Setup different companies of which one person is director but they are separate legal entities.

Would be good to hear other people’s opinions, is it worthwhile, any experiences?

Thank you very much.

Either you've missed something, or I have.

You are in the GST net @ $50k t/o per year so you want to go to the expense of setting up two Pty Ltd companys while your t/o is less than $100k.

Lets examine the GST load of said $100k biz. Headline tax payable is $10k but of course you have bought $50-60k stock to resell, ergo your tax has immediately halved. There are many real expenses involved which will halve your gross so we are down to a couple of grand tax. I, and many others, would argue that you are wasting your time already so why spend thousands to set up two piss fartin companies? Remember that each company pays your accountant each year and that if you pull a few grand profit you will pay tax at 30% on the first dollar.... no threshold applies.

Turn your efforts to running a lean, mean biz which makes a profit. Tax evasion is only worth the effort if you are actually paying a lot of tax.

BTW, your competitors have to pay GST so can't really undercut you. At this point there is only one Q left to ask: You are competitive aren't you?

I apologise if I have been blunt but when you put a fraudulent scheme out there, you must be willing to hear both sides of the argument.

Thommo