I recently finished writing a book which describes a new age relationship style called interdendance. In this husband and wife actually live in separate houses while working inside a single business but in separate departments. Next their children would live inside the business but on another level.
Recently I went to Sydney and saw a number of buildings in which residential buildings were made on top of commercial business buildings. So basically an apartment on top of each business or a number of on top of each.
This would include not only living quarters for my children but also living areas for me and my wife.
My question is as follows-
Would I be legally allowed to create a business in which my children lived inside my business but upstairs while my partner lives separate from me in another house?
This is interdependence and is a very different way of relating to another person.
A business is just a concept not a legal entity or a structure. Only a legal person can own a property.
So you would have a company or an individual own the property. The company or individual could be owner as trustee or in their own right.
You would generally not run any business from the same company or in your own name, for asset protection reasons. So you would have one property owned by a company as trustee (probably). The children would be beneficiaries of the trust. You would then need to consider the terms of the trust to see if a beneficiary can use trust property and if so do they have to pay rent or could they live there free.
If they don't pay market rent and there is a loan on the property then the trust won't be able to claim tax deductions in full.
There may be also fringe benefit tax issues.
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 Terryw,
When you say the chidren would be beneficiaries you assume I must be employing them to work inside the business. Your right typically this would be ideal as myself and or my wife would also be the employers of our children. There would be no other employers for them.
The company could own the “business” where the children live while myself and my wife reside in separate houses owned separately by both of us. We then go to work inside the business but in separate departments and then live together inside the “business” before finally each going home to our separate houses. So my wife would have her own home and have her own bills and life separate from me. I would have the same as we don’t actually co-habitate.No, I was assuming the children were not working. But they could be employed by the business company.
I was referring to them being beneficiaries of the trust that owned the property. (a company should not own property because of tax reasons).
Incidently if both you and your wife owned a house each and used them as the main residence then only one would get the CGT exemption.
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
So the trust would own property which I called the “business” in which myself and my wife call “work” and the children live full-time.
I would be able to have my own house and my wife is also able to have her own house but only one of us is able to get CGT exemptions as the main residence as the second house would be seen as investment.I may pay my chIldren a salary by including them as beneficiaries of the trust as they help inside the business. But remember as I would be working in a separate department to my wife either I employ our kid to work for me or my wife employs our kid to work for her.
A fundamental rule is husband and wife should never have shared responsibilities inside ANY business or workplace as this is a recipe for failure.
You misunderstand 'beneficiary' of a trust. No work involved at all for a child.
If your company wants to employ one of your children then that is a separate issue. You have to watch out for employing under 18s.
If you and wife both work for the same company then it is the company that employs people. If you work in separate companies then either or both (or neither) companies can employ them. Remember if a child is earning money then there are tax issues.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
Yes, well we can work in the same company which is owned by a family trust but the company would have two departments in which each of us work.
According to you beneficiaries do not “work” for money. Employment of children by the company is different from being a beneficiary I get it. I wonder if tax implications are different for beneficiaries then for being employed.
Yes, tax is much different
Children can only earn a few hundred from passive income before they get hit with penalty tax.
Children can get access to adult rates if they are physically working however.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
Yes, well I’m sure many in this situation would consider making sure they happen to be one or the other to reduce tax.
In this, the child/ren may perhaps pay rent to the trust from money they get from being a beneficiary or being employed. This would be rent to help fund their own accommodation inside the business.
This is because the family trust owns the property and the trust is a financial entity in itself which can come up with loses or gains.
If I own a business jointly with my wife then we may employ our child/ren in order to pay adult tax rates but who’s to say they are to be treated any differently as if they were just beneficiaries anyhow?
Beneficiaries in this situation are still going to interact with mum and dad and be asked to do things perhaps to help with homelife or even things related to the business.
They can be employed casual, part time or full-time on books but who really regulates all of this. I mean I could pay them more as adults rather than distributing income to myself or the wife and ask them to pay the rent instead of me or my wife.
Sounds a bit like a motel operated by separated partners living offsite or something. Very confusing.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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Yes, the model also includes private living quarters adjacent to the child’s living quarters. So imagine the building where the children live then ontop of the business next to this is myself and my wife’s private quarters.
Interdependence basically means we acknowledge that we are both very independent people keen on building an interdependent relationship. The model is a framework for the relationship which allows it to actually happen.
I want to improve my model a little further by including a guest section nearby the private quarters.
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