Hi All,
Being reading abit today regarding the new taxes changes effecting Family Trusts. It seems the government has now put an end to a loophole that has allowed distributions from a Trust to minors.
Under existing rules, minors can earn up to $3333 of unearned income before paying tax. This has led some families to put investments into children's names to avoid tax, or to pay tax-free distributions to minors from family trusts. From July 1, the government will slash the tax-free income children can receive from such sources to $416. Once they exceed this limit they will be taxed at 66 per cent on each dollar up to $1308 and 45 per cent on any extra.
What does everyone think?
Hi TTony.
Big deal! It was always a small loophole in the trust legislation and the wealthy were the ones who usually took advantage of it. If you're in a position to even have a Family Unit Trust and pay your kids $3333 you're usually doing ok. Most ordinary Aussies have no idea about how to improve their own financial position let alone the setting up of Trusts and reducing/minimising their tax burden by paying a few of the kids and taking advantage of a very small amount of tax relief.
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