As they name suggests it is a business / investment entity that is owned and run by one individual.  There is no distinction between the owner and the business / investments.  It is the most common form of business / investment operation.

Advantages

1. Easy to setup.
2. Generally inexpensive to operate and maintain.
3. Generally both income / revenue losses and capital losses can be carried forward.
4. Able to access the 50% discount available.
5. Small Business Tax Concessions are available.
6. Capital Gains tax concessions available:
   1. 15 year exemption - had business for more than 15 years; over 55 then tax free upon sale;
   2. 50% active asset reduction - If the asset has been active you will be able to access a 50% discount;
   3. CGT Retirement exemption - Life time limited of $500,000 on the sale of a business asset.  If under 55 years proceeds must be paid into a superannuation fund; and
   4. Rollover - If you sell a small business asset and buy a replacement or improve an existing one, you can defer the capital gain until a later year.
7. Should you wish to terminate the business / investments this is relatively straight forward.

Disadvantages

1. All the income and capital gains will be assessed in the owner's name.
2. Minimal asset protection.
3. Upon death the business / investments will pass to the individual's estate.  Difficult for succession planning.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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