New company registrations still strong

Courtesy of Mark the Graph:

Yesterday, the Barking Cat asked me to have a look at ASIC’s new company registrations. Unsurprisingly, the raw data displays strong seasonality.

Applying the standard R seasonal decomposition of time series by loess package, we can derive a seasonally adjusted and trend perspective for each state and nationally.










    • Janet, it is not at all easy to get a mortgage in a Pty. Ltd. company name/structure. I know a few people that tried to do so and the bank refused. The bank also refused to issue a credit card to the company structure, but had no problem issuing 7 credit cards to the name of the person who owns the company.

      Maybe people are trying to make their own job.

      Also you can defer paying (company) tax for up to 2 years, and in the good old days, you could pull a stunt like declare your company broke, and deregister it. Don’t if you could walk away free though. These are stories I heard but never knew anyone that actually did it.

      • “Don’t if you could walk…” should be “Don’t know if you could walk…”. That is 2 years after not paying tax.

        Should always proof read, no matter how excited I am.

  1. I have NO DOUBT that the recent strength (2009-2012) is due to registrations of companies for SMSF purposes. Happy to be told otherwise.

    • And Janet, you could be right. Combination of SMSF registrations to purchase property investments through superannuation.

      • Change in tax rules has meet many businesses are transferring from Trusts to Companies. Not sure if the figures account for this.

  2. Have to agree that without a split in the types of companies being registered this analysis is completely devoid of meaning.

  3. Wonder whether it has to do with folks losing their jobs or not working enough hours registring companies to start some sort of business to make ends meet?

    • Probably some of that, I say some ’cause it costs about $860.00 to register a company with ASIC, another $600-$700 on top of that for an accountant or solicitor to register it for you.

      Its’ about $230.00 per year for ASIC’s filing fees, and at least around $3,000 per year for an accountant to do all your end of fianacial year accounting (requirement for lodging).

      Also, worker’s compensation is compulsory, the price of that ranges per industry, per job. Then comes the professional liabilty/public indemnity insurance, not compulsory but wise and expensive. Again depending on the industry and job.

      An accountant will usually suggest that, if you’re pulling in under a certain amount of money, it would be just as good to have a ‘trading as’ name, and/or an ABN.

      Maybe people are tossing their luck at running their own business. There certainly isn’t much business happening out there, well not as much as before.

      Why are company registrations up?

      • BotRot,

        Many of the professional types that work in the resources industry and move from project to project are employees of their own companies. Generally speaking, the big design and engineering houses prefer it this way, and many insist on it.
        Given the amount of design and major construction work that has occurred in this area of late, I’m not surprised at this trend.
        I also think that points made above regarding SMSF’s and Trusts, together with a more general move towards contractors, as opposed to employees, are definite drivers.
        Some of the costs you have mentioned are a bit high, but they can be easily offset by self-employed higher income earners. There are many ways in which a company structure can offer tax advantages for the self-employed.
        That’s assuming they have a tax problem in the first place, of course 🙂

  4. There is another factor at play here and that is a very BIG change in teh Law regarding Companies and Trusts.
    I’m not sure of its significance in the numbers but I’m guessing there is a fair bit going on.

    Most small businesses run as Family Trusts. Associated with the Trust you have a company which is a beneficiary of the Trust. All income from the Trust gets paid to the Company which pays company tax. (It’s not a tax dodge. Full company tax is paid on earnings) About 2 years ago the Tax Office changed the rules concerning the company lending back the after-tax profits to the company. (Some idiot within the tax office really had no idea what he was doing. Previously it just lent back the money ad infinitum. This meant that the Trust could expand the business with its retained earnings as any company would.

    The new rules required the Trust to pay interest on the loan to the company and also that the loan had to be repaid within five years. Effectively this means you cannot use retained earnings to grow the business with a Trust structure.
    The solution now is to create a new company, owned by the Trust, but which takes over the business of the Trust. Earnings are now earned within the company and can be retained for business expansion.

    Given the number of Trusts in Aus even if only a smallish percentage have yet proceeded with these changes it would make a significant difference to the numbers of the formation of companies.

    As an exercise it is a total waste. The Tax Office was not in fact losing any taxation with the old structure. Maybe they see their role, as in a lot of the PS is simply to make running businesses more difficult and expensive, just on a matter of prtinciple.