Greg Smith is very much the entrepreneur and is the proud owner and director of the very successful business. The business looks after all aspects of the project from design and layout of an empty shell to a fully functioning restaurant. Greg's experience working as a chef and manager in a wide range of restaurants, cafes, pubs, hotels, catering venues and commercial kitchens are the unique reason why he understands better than most what his customers want and deliver with the time frame their exact solution.
After meeting with Greg, we identified the following concerns.
Greg's personal share portfolio had performed very well during 2012. He had sold shares during the year that would require him to pay Capital Gains Tax on $52,000.
His Self Managed Superannuation Fund only had a small balance, and he wanted to substantially increase this by the time he retires.
His business has been very profitable, and after splitting the profits with his wife and child through his family trust he still had a large personal income tax bill.
Twelve Chartered Accountants identified the following solutions.
The first thing Twelve Chartered Accountants did was to review Greg's share portfolio prior to the end of the financial year. We were able to highlight a number of shares that he owned, which had reduced in value. We advised that he should sell these shares (at a loss) which would reduce his capital gain, therefore saving him tax.
Greg understood that this was the best solution to decrease his tax, but he still believed these shares would make a profit in the future and was therefore, hesitant to sell them.
Understanding Greg's hesitance, the money from the sale of these shares was transferred from his personal bank account to his Self Managed Superannuation Fund's account. Due to his belief that these shares would come good, we advised him to repurchase these shares in the name of his superannuation fund. This gave Greg a Tax Deduction for the money that he transferred into his SMSF, upto his maximum of $25,000 per year.
If Greg was, then to sell these shares from his SMSF in the future the capital gains tax in the superannuation fund in considerable lower than his personal account.
By doing this Greg had increased the value of his superannuation fund and had also decreased the amount of personal taxes he was previously paying and it hadn't cost him a cent.
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