Q&As

Tax Structuring: Beginning with the End in Mind with Jacci Mandersloot

Wednesday May 9, 2018

Jacci Mandersloot is a Chartered Accountant and founding Director of MC Tax Advisors, a specialist tax consulting firm. MC Tax Advisors provides specialist tax advice to businesses, and to accounting practices, operating in the SME market.

Jacci Mandersloot

Jacci has in-depth technical and commercial knowledge gained from more than 25 years' experience in tax consulting. Jacci consults on all aspects of income tax, and GST, to a range of clients across property, including Aged Care & Retirement Villages, retail, and manufacturing, Jacci is also involved in tax education through her membership of various Tax Institute committees and presenting to tax discussion groups and forums.

We had the pleasure of sitting down with Jacci recently to discuss key challenges and opportunities facing the industry today.

Read the Q&A below and hear more from Jacci at the Business Formation, Tax Planning and Exit Strategies seminar.

Can you tell us a bit about yourself?

I have been providing tax consulting services to the middle market for over 25 years. My knowledge and experience extends across all areas of income tax and a wide range of industries including property, retail, manufacturing and private investment. My focus is developing practical solutions to complex tax issues.

My colleague and I founded MC Tax Advisors as we felt there was a gap in the market for high quality, commercial, tax advice that was accessible to all taxpayers.  We work alongside small practitioners to enable them to provide the specialist tax expertise found in larger firms, to their clients. We also consult direct to businesses, investors and high net worth individuals with complex tax affairs.

Your topics focuses on ‘Tax Structuring: Beginning with the End with Mind’. Why is it important for practitioners to attend your session?

When starting a new business or making a significant investment, most clients will seek advice from a trusted practitioner on what is the best structure. Getting this right from the beginning is vital because, if the structure doesn’t meet a client’s goals down the track, the cost of restructuring a successful business or investment may be prohibitively expensive.

However, the decision making process is not always straightforward. Although tax is an important factor, there are many considerations in choosing the ideal structure, including asset protection, estate planning and ultimate exit strategies (whether by way of sale, passing onto the next generation or gaining external investment). Practitioners need to understand each of these factors and the impact they have on choosing a structure. Even if a structure has been well planned, circumstances can change so practitioners also need to understand options to adapt a structure.

My session will assist practitioners in recommending the best structure for their clients by understanding how these factors can interact under the variety of structures available.

What are some of the developments you see ahead for the area? 

"I see the management of trusts within complex groups as being an increasing focus for many SMEs and high net worth individuals going forward."

I see the management of trusts within complex groups as being an increasing focus for many SMEs and high net worth individuals going forward. Recent and anticipated tax legislative changes, as well as case law developments in the context of asset protection and family law, mean the use of trusts needs to be carefully managed. Difficulties with the intergenerational transfer of wealth held in trusts has also become a significant issue for high net worth families, who will increasingly be looking at ways to achieve this tax effectively.

From a policy perspective, the Government has been focussed on encouraging start-ups and  small business entrepreneurs, through targeted concessions. Taxpayers in this space will need to ensure they are in the best position to take advantage of these concessions.

What are some of the challenges that face accounting practitioners when their clients’ structures are not tax effective/efficient?

Businesses now expect more from their advisors than just tax compliance, and so are looking for pro-active advice to remove tax inefficiencies. However, many of the rollovers and concessions available in the tax legislation are of limited use to SMEs looking to restructure. There can also be complexity in undertaking a restructure, resulting in high compliance costs, or tax risk, which can be prohibitive for many small businesses.

What are the common mistakes accounting and legal practitioners make in this area? 

A common mistake in establishing structures is trying to keep things as simple as possible to save on compliance costs for a client. Simplicity can be a good thing of course, but practitioners need to consider the long-term goals of the client in determining whether a structure is the right one, not just one that suits their needs at the time. Circumstances can change quickly and it may be too late to change the structure without a cost. A structure also needs to be adaptable to change – a lot of complex structures arise when piecemeal add-ons are made as a business expands.

On the flipside, a client may have been set up with the right structure but the advisor fails to adequately explain it. If a client doesn’t understand their structure, and they don’t conduct their activities accordingly, you can end up with a big mess to tidy up come year end.

What do you see as some of the key takeaways and benefits for practitioners attending your session?

Practitioners will gain an understanding of different structures, and how the client’s objectives affect which structure should be chosen. They will also learn about some strategies that can be utilised to improve existing structures.

You can hear more from Jacci at the Business Formation, Tax Planning and Exit Strategies seminar, being held on Tuesday 19 June at the Royce Hotel Melbourne, Melbourne.

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