Hi Josh

You should probably have a company operate the business. If the business gets sued then you would usually be personally safe. eg. If one of those baldness cures you are selling could cause an allergic reation and kills someone – their family sues the seller = the company (not you).

The profits for the business would be held in the company, but the company could pay you a small wage for running it. Any profit would then accumulate and could be retained in the company or distributed to shareholders. Since the company has already paid tax (30%) on the profits it would not be fair if you are taxed again. So if the shareholder receives dividends and their income is low enough so that their tax rate is under 30%, they will get some extra tax back. if their income is higher, they may have to pay a bit more – but they wouldn't have to pay tax twice.

Now the shares for the company could also be owned by a discretionary trust. This way a lot of the profits could be distributed into the trust. From there it could be further distributed to a large number of beneficiaries (at the trustee's discretion). If you do not have a lot of family you could distribute it to you could always put it back into another company and cap the tax rate at 30%. You should not accumulate money in the trading company or it will be at risk if that company is sued.

For your property you could have it in another trust. It may be negative geared so a loss will accumulate. But if you set up correctly the profit from the business will be able to be distributed into this trust to offset the loss.

Doing all this will give you a lot of protection if sued and also should be effective in saving some tax too.

If you are making that sort of money you really need to sit down with a professional and seek some proper advice regarding set ups.

You could even look at setting up companies offshore too (for the business)

Is there  a box for maybe?

(Not sure either sorry)

I think you might as well do the full real estate licencee course in you are thinking of being a buyers agent. it is only a little bit longer but would open up much more opportunities. Bigger money too I would think. It is also good that you are getting some experience in a valuer firm as you can see how things are done. Getting some real estate experience would be great too,

Even if you stay long term having a IO is better I beleive. You can still save the same amount of interest by putting the extra money into the offset account and if you do change your mind and move out you will be much better off at tax time.

With IO loans you could also chose to pay it off as a PI too and then just reduce the repayments if you decide, however if you started on PI you would need to reapply to change to IO (usually).

Hi Josh

Think I can remember you.

You can still use a Hybrid Trust to offset negative gearing, but will lose some flexibility.

But because you are self employed, you can use your business income to offset any loss in the trust – ie you can negative gear in the discretionary trust.

Hi Richard

Does that rule apply to selling properties under a standard contract?

You should never run a business in your own name! A friend of mine was just sued for $800,000 because one of his employees committed a fraud – he had the business owned under his own name. Having a company will limit liability (in most cases). Get a new accountant.

If you are making that sort of money you would want to set up good structures to save tax too. Probably a discretionary trust in there someone.

Then for your property investments you should have another structure. If you have a business, then probably a discretionary trust is the way to go for the properties too (a different one) as you could divert income into the trust to offset any negative gearing losses.

Whatever you do, I think paying the $60,000 off your home loan first would be a good option. This will save you interest – interest which you cannot get any deductions for. Once you pay it into the loan you can then reborrow it and claim the interest if you use it for deposits on investment properties.

It is very common and can be very useful, especially if you have a PPOR loan.

You can always transfer your property to a trust a few years down the track too. This may give it time to build up more equity which can be released to pay off your home loan (but would result in more CGT probably).