Does anyone understand the tax laws enough to give me some advice.
If I do not distribute income to by corporate beneficiary and state so in the trust deed, can I use the non distributing funds as a liability to the company. Ergo the company does not disclose the not distributed funds in the tax return, but has it on record that the trust is liable for those funds?
Could you please rephrase that?
Are you saying you want to distribute income to a company (wihtout actually distributing it?), and then teh company loaning the money back to the trust (wihtout actually any money changing hands?). And you don’t want it to show up on the company tax records so the company doesn’t pay tax on it?
I don’t think you can do that (if that is what you are asking?). Any income of a trust that is not distributed, will be taxed at the maximum rate of 48.5% (trustee will pay this on behalf of the trust). So the money will have to be distributed to someone. You can distribute it to the company which can hten loan it back to the trust, but the company will have to pay tax!
I am not an accountant!
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I’m not an accountant either, but I’m pretty sure Terry’s right.
If you don’t distribute the funds then the trust will be taxed at the max rate. If you do distribute then the company will be taxed at the company rate. Either way they will be taxed somewhere.
Rod.
To true Rodc, ifyour not paying tax then you are not making any real time money.
Its impossible to be an expert at every angle on property. Find your expert that you are completely happy with and reward their loyalty well.It worked for Sidney Kidman, Australias original property investor.[
]I know that if no beneficiary has been assigned, then the trustee is liable for tax on accumlated income of 48.5%. But I read somewhere that the trust is still distributing the income, but taking it as a liability to the trust and at a later date will be required to distribute it.
Prima Facie, it does’nt make sense, I’m just getting clarification on the tax laws in this case.1. Ask an accountant.
2. If you wish to do something like that, you must actually distribute the funds, not just on paper. If you wish to loan the funds back to the trust, you would have to do so on a commercial basis, with a commercial interest rate. Ie you would need a loan contract between the two parties charged at market interest rates.
3. Refer to 1.
Regards,
Kristoffer Sheather.
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