Tax Strategy 2: Gain advantages with a Discretionary (Family) Trust

A Discretionary (Family) Trust structure will protect your assets from any future claims by creditors that may be made against you as an individual. It’s also an effective tax planning strategy.

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Setting up a Discretionary Trust offers you flexibility to distribute income and capital gains to others such as your spouse and children over 18.

From 2011/12 financial year onwards, trustees are required to sign resolutions/minutes declaring the split of trust income to beneficiaries before 30 June. This can be simple for some family trusts but complex for more detailed business structures.

A review is necessary to accurately forecast and allocate business profits and investment capital gains, and help minimise tax. However, if the resolution is not completed by 30 June 2017, the ATO will tax the trust income at the top marginal rate (49%).

Sasi’s Tip: Meet with your Proactive accountant before 31 May 2017 and go through your business financials and personal investment portfolio.

Get a good idea of how much profit you expect to make; how much taxable capital gain you’ll have for the year, and what your investment income and losses will be. Know how much tax each beneficiary will pay.

This will put you in a good position to make distribution decisions and sign resolutions declaring the split of trust income to beneficiaries before 30 June.

The information provided above is general in nature and does not constitute financial advice. Find out more on this topic and get financial strategy advice that’s right for you.

Call (03) 9021 6662 and book your strategy session today.

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