Seeds. You still haven’t explained how your trust scenario means no tax is paid.
I want to know as if it works, I’ll set one up ASAP
I want to know as if it works, I’ll set one up ASAP
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Australias tax system takes from the young to give to the old
- Thread starter Seeds
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- #102
Well there are plenty of those. Plus in my example I've put in workers on the standard wage as beneficiaries. Tax gets reduced from 45 to 15 percent.
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- #103
Well I'm not going to tell you then as I don't believe people should be setting them up.
What do you mean? "Plenty of those"?
There's definitely a scenario in which you can do it, but it's not exactly the scenario you were describing, was it? At the point in which you have disposable income not everyone can simply cheat the system. It only works in this scenario if you have people you want to disperse part of your life savings passive income to who aren't working. Remembering it's legally their money once it's dispersed to them.
You aren't exactly putting your mates in it, are you?
I have no idea what you mean by "I have put workers on the standard wage". What do you mean by "standard" wage?
Further what do you mean "workers" as beneficiaries? You can't pay trust distributions in lieu of wages, as you bypass superannuation requirements, PAYG tax etc. The ATO will have your ass if that is what you are implying.
The only scenario in which you reduce form 45 to 15 percent is via super contributions. There's no function within a trust that would achieve that, as 15% isn't a marginal tax bracket and discretionary trusts are dispersed via a trustee's personal income.. You might pay an effective tax rate of 16% or so from CGT distributions after optimization, but I don't think that's what you were talking about.
Im sure some accountants can step in here.
Who is lending a line of credit (in what sounds like the millions) for 1% interest?
Give me their number as I would like to have a chat with them....
Again, this scenario sounds highly exaggerated.
What asset class are you talking about, shares? Well there's clearly a bit more risk than it being set and forget isn't there? As we've seen over the last 20 years.
Property? Well you have diluted form of a wealth tax there if it's not their PPOR, primarily land tax, but also council rates, insurance, property management (if it's rented) etc.
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Well I'm not going to tell you then as I don't believe people should be setting them up.
Ok, so tax is in fact paid. So income is distributed to each beneficiary to pay at the marginal rate.
Bit like a company distributes profits to shareholders to pay tax at their marginal rate.
Are companies a huge tax dodge too?
It's hard to imagine any worthwhile structural change occurring in the current environment
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- #109
Companies and shareholders are the same thing. Parents and their children are not.
A private company can be set up to have children as the shareholders. In fact the wealthy often use companies as income doesn't have to be distributed like it has to in trust to avoid being taxed at the highest MTR.
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