What is tax structuring and who should do tax structure assessments

Tax structuring involves strategies and plans to reduce the amount tax you, your business, and your Estate is required to pay. It is an essential aspect of tax planning and starts with tax structure assessments. These assessments will look at your personal and business assets and financial operations, assessing how and where to save on tax, avoid unnecessary taxation and avoid penalties.

In a nutshell – structuring is the legal way to minimise the burden of taxation. It is also an essential requirement for businesses where taxes comprise a large part of the cost of doing business. However, careful structuring can be applied with the same measure of benefit to personal financial tax affairs, investment portfolios, Estate planning and administration.

Good structuring, set up and executed by professional and experienced tax accounting and assurance firms, will minimise tax payments and maximise tax deductions and rebates. Carefully thought out structuring will also help you to gain the most from investments and remain legally tax compliant.

Tax structuring for different entities:

• Tax structuring and tax structure assessments for businesses: To gain the benefits of comprehensive tax planning and the best possible structuring, the process should ideally be initiated from the start of doing business. The choice of legal business entity can have a major impact on taxation. Structuring is also a core consideration in the operational and financial plans of a business plan, taking the legal entity into account. This will help businesses avoid the many and varied ‘tax pitfalls’ entrepreneurs are often not aware of, and that may require change in short and long-term operational plans.
• Tax structuring for Trusts and Estates: In the case of Estates, excellent structuring will help to minimise capital gains and other taxes to which an Estate may become subject on administration. Structuring in this case will often involve setting up trusts and offshore trusts to protect assets. In many cases, Estate structuring will involve business, investment and personal structuring, and can involve local and international assets and operations. Your structuring needs will be unique in many respects and you’ll need professionals with experience and expertise in business, personal Estate and trust tax.
• Tax structuring for Offshore Assets: Historically offshore investment portfolios have been a key component of structuring for a diverse portfolio of investments. Assets held in different countries with investor friendly economic landscapes, tax incentives, benefits and fewer risks can boost investment portfolios. The buying and selling of such assets are therefore a big part of structuring.

Foreign assets held in an offshore trust can be protected from unnecessary taxation, provided your offshore trust is properly, ethically and legally managed by reputable offshore trust managers.

Reputable trust management will ensure compliance with South African and foreign regulations (regulations that are themselves subject to change) and that they submit to foreign tax, SARS and trust review procedures – and this brings us on to the importance of who is doing your tax structure assessments and structuring:

Tax and compliance professionals offer tax planning, tax structure assessments and tax structuring:

Tax structure assessments should always be done by accredited reputable accounting and assurance firm – professional accountants who are experts in tax and compliance. Tax structuring professionals will be up to date on any changes in SARS and international tax laws and legislation that will affect taxation. This is especially true for businesses that operate internationally, and/or have foreign assets and operations in 2019.

Such companies or asset portfolios may face double taxation or ‘falling foul’ of SARS and foreign tax regulations without tax structures updated to be in line with new legislation for taxation of foreign income.