Hi everyone
I am wondering if you can have your cake and eat it too! The 1st question I have is even though I am not a builder there is not much that I can't do renovation wise eg. I can do new bathrooms, paint, tile, plaster, landscape, screens and most other things, however I was wondering if I was to open up a business for general building/handyman type services would I be able to charge myself out to do renovations on any investment properties that would be obviously brought under a different business/trust name by myself? 2nd question is even though I am not a builder how hard and what do I need to do to get a license for this business?
3rd question is it against some sort of ATO legislation that this can't be done? 4th question is would you have to do a certain amount of work for other parties? 5th question is if this is possible is there anyone out there doing it now and how does that work for them? I could see this as a win-win situation if you were able to do it so that all of your time renovating would have some sort of hourly rate captured.
Providing that you are not breaching anything under the Builder Licensing Act in your state ie you are not carrying out building work or undertaking works which require holding a trades licence or carrying on a building business or the value of works does not exceed the threshold requiring insurance – not a problem.
Thanks Scott
It sounds like it could be a lucrative little set up if done and managed correctly.
Troy (Newcastle Knight)
To answer some of your other questions: how hard is it to get a licence – try a cert IV in building or a 4 yr apprenticeship in a trade might be able to get time off for good behaviour. Alternatively, you might be able to employ someone as your licensed supervisor and hold the company licence.
You will need to be a separate entity from the ownership in order to look above board to the ATO when claiming expenses. Yes you will need to do a fair proportion of your work for other clients (outside your group of entities).
No that is not possible unless the 'business' is a separate entity.
Obtaining an ABN and/or a business name doesn't change things as you are still a sole trader and you cannot trade with yourself.
If you want to do that sort of thing you would need to open a company or a trust. The company could then with you the individual and you could charge a fee.
Watch out for licencing. Builders need to be licenced and the license needs to be in the name of the contracting entity. There is a recent QLD case where a couple of builders opened 2 trusts which then entered into a partnership. The individuals were licensed but the trustee companies or the partnership wasn't. So the contracting party was not a licenced builder and some client refused to pay on this basis and the customer won. They also got prosecuted for not having a buidling licence.
Walton Construction (Qld) Pty Ltd v Plumber by Trade Pty Ltd & Ors [2012] QSC 264
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry
Obviously I am trying to think outside of the square but it is very interesting to read comments about other companies/trusts who have had the same idea. Going by what I am hearing it may be more trouble than what it is worth to be honest. However not to worry it is not going to stop me from doing my own work and save some money.
Cheers Troy
Newcastle Knight
It depends on why you are doing it. 3 possible reasons:
1. Business – such as setting up a professional company which will do this for others too
2. Asset protection – diverting funds legitimately to a trust
3. Taxation – dverting funds to other family members on lower tax rates.
If it is just a husband/wife sort of thing where you will end up diverting money to the trust and then only have the trust distribute to yourselves then there is no real benefit. You can claim a deduction but end up with income equal to the deduction.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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