NSW Company structure for partnership unrelated parties

[Jet Abe]

HI, I am really confused about what would be a good business structure for myself.

We are two unrelated parties who want to manage a business together. The assets in the business can be bought individually by both of us in equal numbers (These are spa machines costing AUD20000 each and then placed at different sites)

We then want to possibly lease them or license them to a Trust for use, day to day running and earning income.

I wish to keep the business as separate as we possibly can to avoid disputes as well as flexibility.

There are some future possibilities like: (and many i would have missed)

• We can buy some extra machines in our personal capacity in our separate companies allowing us to choose what sites to manage together.
• We can always end this arrangement with a simple termination of lease?
• I want to ensure that each parties assets are protected in case one of us goes bankrupt or protect from any future complication.

Accountant is suggesting buying together in the Trust and leasing to the company (Is there any disadvantage of doing this way which is different to what i thought would be ideal i.e. Buying in our companies and leasing to the Trust).


Thanks in advance and any help is appreciated!

 

[Rob Legat - SBPL]

There's not enough information available to give you a clear indication. I would suggest your accountant is on the right track. Depending on your trust structure, you want to keep that to 'close' associates as much as possible (ie family) to be able to use the taxation benefits of a trust to full effect. It can also be easier to 'undo' or buy out the other party in a company than a trust if things get messy. Changing the beneficiaries of a trust may 'resettle' it, and make you possibly liable for transfer duty on the value of the assets (although I'm not sure about this in NSW).

Also, in terms of liability, if the company is the entity leasing out the machines it's a better shield against legal action should something go wrong.

 

[Rod]

And put clauses into the trust and company articles that specifically allow you to compete.

 

[zaffin]

Jet Abe check out this new legal ai tool I've been using. It's a big slow as they build it but pretty awesome and free https://legalmind.com.au . It's pretty epic, it produced:

Given the nuances of your proposed business arrangement, the most suitable structure could be a combination of company and trust structures. This is based on the legal frameworks offered in the Corporations Act 2001 (Cth) and the Trustee Act 1925 (NSW) that help regulate companies and trusts respectively.

Under these laws, a possible option could involve creating two separate Pty Ltd companies for both parties, allowing individual purchasing of assets (spa machines). The Companies Act 1985 of Norfolk Island, Section 38 suggests that each of your individual businesses would have their unique identity and