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Pty Ltd adding an employee

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Views 102

Replies 2

hi

 

I have an existing dormant Pty Ltd Company and am now investing in shares. Can i add my son (19 years) currently studying who has a finance background as an employee and pay him from the proceeds generated from the shares?  He is registered as a Sole Trader so do i still need to pay him super ?

 

Thanks heaps 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Devotee Registered Tax Practitioner

Replies 0

Some considerations:

 

1. Is your son actually doing anything to earn income as an employee?  If hired as an employee, Superannuation will need to be paid each quarter at 9.5% of ordinary hours. Will the wages meet minimum wage laws stipulated by the National Employment Standards?

 

2. Are you going to be share trading on a revenue basis, or buying and selling on a capital basis?  Are you aware that property held by a company does not receive the 12 months 50% discount on capital gains?

If you are intending on trading contracts for differences (CFD) these are always on revenue basis

Refer to this previous discussion on the topic: 

https://community.ato.gov.au/t5/Personal-tax-questions/CFD-taxation-on-gains-and-losses/td-p/4458

 

3. Would a trust structure be more appropriate where you could distribute annual profits, including dividends received with franking credits to family beneficiaries such as your son, and still take advantage of the 12 months 50% capital gains discount?

 

2 REPLIES 2

ATO Community Support

Replies 0

Hiya @KingJulien,

 

The first thing to consider, is whether your son is an employee or a contractor. We have a great tool on our website that will help you figure it out. There is also an option to see if you need to pay super, if they are considered to be a contractor.

 

Employee vs Contractor tool.

 

 

Most helpful response

Devotee Registered Tax Practitioner

Replies 0

Some considerations:

 

1. Is your son actually doing anything to earn income as an employee?  If hired as an employee, Superannuation will need to be paid each quarter at 9.5% of ordinary hours. Will the wages meet minimum wage laws stipulated by the National Employment Standards?

 

2. Are you going to be share trading on a revenue basis, or buying and selling on a capital basis?  Are you aware that property held by a company does not receive the 12 months 50% discount on capital gains?

If you are intending on trading contracts for differences (CFD) these are always on revenue basis

Refer to this previous discussion on the topic: 

https://community.ato.gov.au/t5/Personal-tax-questions/CFD-taxation-on-gains-and-losses/td-p/4458

 

3. Would a trust structure be more appropriate where you could distribute annual profits, including dividends received with franking credits to family beneficiaries such as your son, and still take advantage of the 12 months 50% capital gains discount?