Starting an Investment Company - Any Advice Please

jesho on 27/10/2014 - 14:29

Hey guys,

I'm a recent finance graduate who is taking some time off following my studies.

My dad has recently proposed I invest some money for him as a professional service. Dad (divorced) is on a pension so is happy for me to bank any profits I may make as long as it does not impact his income. From what i've researched he is allowed to make circa $6000 annually in addition to his pension. I've also been told by a CBA advisor that the ATO automatically assumes he makes 3% on his investments and gets taxed accordingly, although i'm a bit fuzzy on this and it's implications for me.

I'm only looking to invest for him and possibly other family members. I've read up on starting a business as a sole trader but would greatly appreciate any other advice regarding setting up a new business and/or tax considerations.

Thanks in advance,

Jesho

Financial

Comments

  • Malarkey on 27/10/2014 - 14:41
    +19

    If your mixing family and business the general rule of thum is "You're going to have a bad time…"

    Seriously, just don't.

    • Climpton on 27/10/2014 - 14:43
      +1

      if its necessary, write a contract. This way each person knows their rights, and there is no 'fuzziness' which you seem to have a lot of. Negotiate what happens if things turn sour so there is no argument fueled by emotion rather than reason and logic. You'd be surprised of what money can do to the closest of families. But I second what Malarkey is saying.

    • StewBalls on 27/10/2014 - 15:09
      +6

      Seriously, just don't.

      Truer words have never been spoken. +1

    • jesho on 27/10/2014 - 16:40

      Ah yes, i've been well informed of the dangers of mixing the two.

      However, my dad has explicitly told me that he understands the risks and he understands if worse comes to worst. He sees it as an investment in me rather than one for himself. Additionally, i'm his Power of Attorney so i'm sure that will grant me some legal protection but i never envisage it resorting to that.

      I've invested for my dad in the past and although i did quite well, he was well aware of the risks involved.

      • SAM JIM on 28/10/2014 - 11:09

        Go for it. No risk no return. It's the best way to get some good experience.
        Start small so even if you lose a portion of your portfolio, you still can get back up.

  • IMBI3 on 27/10/2014 - 22:57
    +2

    Your comments: I've also been told by a CBA advisor that the ATO automatically assumes he makes 3% on his investments and gets taxed accordingly, although i'm a bit fuzzy on this and it's implications for me.

    I am not sure if you are ready to be a professional investment company

    Better leave it to the professional (I don't mean OZBs)

  • [Deactivated] on 27/10/2014 - 23:22
    +2

    This is all going to end in tears.

  • shortgum on 28/10/2014 - 01:30
    +1

    NO

  • pebee47 on 28/10/2014 - 13:01

    I would suggest the Lawmakers would consider you to be proffering Investment Advice, especially if you start doing it for other members of the family as well, and most certainly if you register as a Sole Trader. Where's your credentials? You do not have your Licence, nor Professional Indemnity Insurance yet. Not to mention Membership of Professional Associations and if you are doing Prof Development regularly.
    As a Finance Graduate I would suggest you should already have an understanding of Deeming Rates. Your statement that a Banks Financial Advisor was the person who made you aware of this suggests that you are not yet ready to be a Sole Trading Investment Advisor/Surrogate.
    Its not what you are doing but what they think you may be doing or going to do.
    The other way is perhaps he "lends" you a sum of money for which you pay interest, the same way you might borrow against your mortgage for investment purposes. If he lends you up to $200,000, you pay him his $6000 income limit for his pension. If the Deeming Rate is 3% you cover the Tax man's presumption as well.
    Any further profits are yours to sort out with the ATO. If you lose the money, you still owe the Lender the Capital.
    That way I believe that would get around the above Professional Accreditation problems.

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