Case Study: Transforming Business Structures and Protecting Assets

The Situation

A client and his wife, owners of a commercial finance brokerage, were successfully running their business with an annual turnover of $700k. With no employees and a lean operation, they were content with their current accountant but curious about what The Gild Group could offer to help their business grow. Referred by a friend, the client engaged The Gild Group to explore potential opportunities beyond standard accounting practices.

The Service

Maurice Sucevic from The Gild Group initiated discussions with the client, focusing on a tailored ‘VCFO-lite’ model.

This approach set clear business goals and established a framework to track progress.

During these discussions, the client highlighted two significant concerns:

1. Building the Residential Loan Book:
   The client wanted to expand the residential loan book, the business’s primary profit driver. Maurice analyzed the costs of hiring an employee, concluding that to break even, the new hire would need to write approximately $3.5 million in loans per month—a target that seemed unrealistic. To address this, the client adopted a commission-based model, with Maurice collaborating with HR Anywhere to formalise the arrangement.
2. Inadequate Insurance Coverage:
   The client was only paying $1,700 annually in insurance premiums. Maurice involved Corey from Gild Insurance, who identified that a significant portion of the loans being written were not covered under the existing policy. Corey then brokered a new insurance policy with appropriate coverage levels.

Additionally, Maurice engaged Gild Legal to review the client’s business structure for potential planning opportunities.

The team discovered that the personal shareholding posed a significant asset protection risk for the client and his wife.

After obtaining a valuation of the business, they presented a comprehensive restructure plan, moving the shareholding into a holding company owned by a discretionary trust.

This restructure offered several benefits, including:

• Uplifting the Cost Base of Operating Shares: Reducing potential Capital Gains Tax (CGT) on future exits.
• Eliminating CGT on Restructuring: By accessing Small Business CGT concessions.
• Enhanced Income Distribution Flexibility: Allowing more strategic financial planning.
• Increased Superannuation Contributions: Facilitating additional contributions outside of existing concessional and non-concessional caps.
• Innovative Funding Model: Allowing the conversion of future assessable income into non-assessable vendor finance loan repayments, effectively reducing future tax liabilities.

The Results

The client has effectively transformed their business, establishing robust financial goals and accountability processes to support strategic decision-making.

With enhanced insurance coverage, the client no longer worries about potential gaps in their policy.

The restructuring of their business has addressed personal asset protection issues, optimised their business structure, eliminated CGT, and unlocked the ability to receive non-assessable loan repayments, significantly reducing future tax liabilities.

Are you ready to transform your business and protect your assets?

At The Gild Group, our multidisciplinary approach ensures that all aspects of your business are optimised for growth and protection.

Whether it’s unlocking your business potential, protecting against risks, or restructuring for future-proof shareholder returns, our talented advisors are ready to collaborate and deliver tailored solutions.

Contact us today to take the next step toward transforming your business.