Monthly tax tip:
Husband and wife partnerships can be quite the tax saving entity for some family businesses. The typical scenario is the husband acts as a sole trader paying all tax on the income earned, however the wife plays a vital role in the business as well but doesn’t receive a tax distribution. As individuals pay marginalised rates, the husband would be in the higher tax margin. If the business was instead to act as a partnership then the taxable income would be split which would lower their overall family tax by placing both partners in the lower tax margin. Please ensure that you consult your tax agent to set up this type of entity to avoid illegal income splitting situations.
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