Contractor versus employee Status

With the reduction in the small business company tax rate to 28.5% and immediate deduction of $20,000 for business equipment for small business until 2017, there will be an increased focus by the

ATO to ensure Contractors are indeed independent contractors and not employees.

This may have substantial implications to those Businesses that utilise the services of contractors as well as the contractors themselves.

At WLM we can advise and assist Independent Contractors to have the correct and most efficient structure.

Incorporation and the use of Service trusts
Medical service practitioners are generally prevented from holding profits within a medical practice company and non medical spouses are not able to earn dividends from shares in a medical practice company (Taxation Ruling IT 2503), leading to very few benefits of incorporation for sole practitioner medical practices.

The main disadvantages of incorporation include the obligation for workers compensation insurance, potential risk of payroll tax and division 7A loan issues. There can be advantages of incorporation when the medical practitioner is also in receipt of employment income, has one or more motor vehicles and does significant business travel.

Service trusts can be a great way of sharing costs for Medical Service Partners and provide a profit share for family members. But to be useful, the service trust needs substantial costs like wages and rent.

We advise on and implement the appropriate structures for all our clients.

Creating a Saleable business
For many professionals when they retire, their business retires with them. For some , they will be happy with this and will invest in their Superannuation and other investments. For others, who have invested significantly in their business, they may need our assistance to ensure they can sell their business when they choose to retire.

We can help through benchmarking against other like business, to identify weak areas and ways of improving the business. We can review the structure of your business, assist with succession planning and provide valuations.


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