Double Taxation

[Flipper]

If your company does a development with a money partner, what are the ways your company can avoid double GST and income tax?

[CJ]

One is a tax on goods and services, the other a tax on income.

Easiest way to avoid income tax is to make a loss but I wouldn't recommend it!

[ChrisD]

I don't understand the question Flipper - why would there be any double taxation in this case?

[Flipper]

In all cases our company will never directly own the property, so I guess it would go into a trust or the partner's company.

Our money partner could own the property with our company having a contract to management the development, and payment would come out of the profits. In this case, I think there would be a double taxation situation.

[CJ]

If your entity was GST registered it would suffer GST on any service fees earned. Asssuming there was no expenses, then you would suffer GST on the service fee and then income tax on the net service fee.

Thats just the way it works. No way to avoid.

[kyotolaw]

Any Service Fee that your company receives will contain GST. Your money partner can use the invoice from your company to offset his own GST bill from the sale of the property.

Is that what you mean? As the development manager, your services are an expense for the money partner, and he can deduct those from his profits before paying tax.

So there will not be "double taxation", but you will each have to pay your fair share.

[Flipper]

So there's GST on the sale price of the property, and then we also have to pay GST on our service fee. What if our company were paid as beneficiaries of a trading trust? Would there still be this double GST? I'm coming from the viewpoint of owners of the development since we are initiating the whole thing and it's up to us to maximise the profit.

[Kerry Christian]

Sort it out!!

Get real advise,,,,, the rest is just heresay

[kyotolaw]

heresy or hearsay!

Hear hear on getting some real advice.

[CJ]

Third the get real advice.

Other option is create a real simple example with actual dollar amounts. Figure out which amounts are subject to GST and which income tax.

Provided it is a business to business (B2B) transaction, one persons GST expense is a GST deduction for the other so it kind of nets out. it is only Business to consumer (B2C) that causes real issues with GST since they cant claim the GST.

[Flipper]

Ok, I'll get professional advice. Thanks all.