In the lead up to 30 June 2023, we want you to know why using a “bucket company” can be a great
strategy for saving tax on trust profits distributed.
Do you have a Discretionary or Family Trust that generates profits? If yes, then this strategy may apply to you. A “bucket company”
allows you to “cap” the tax on profits distributed by a trust to 30% or 25%. This is much less than the individual top marginal rate of
47%!
Here’s how this works:
Assume a trust earns $250,000 in profits from business.
|
OPTION 1 Distribute profits 50 / 50 to Individuals 1 and 2. Total tax (inc. Medicare Levy) payable = $66,734 (26.7%) |
OPTION 2 Distribute $90,000 each to Individuals 1 & 2 and distribute balance of $70,000 to a “bucket” company at a 25% tax rate. Total tax payable = $60,534 (24%). (Note: This strategy assumes that the $70,000 in cash is available to be distributed to a bucket company, otherwise what is known as a Div 7A Loan Agreement will need to be entered into and loan repayments made over a 7-year period.) |
The cash in a “bucket company” can be used to invest in shares, property, or to lend to other entities at a specific interest rate.
We provide strategic business and tax advisory, underpinned by our expertise in financial planning to ensure we develop financial structures that are smart and well considered.
A good credit score can lead to better loan terms, lower interest rates and smoother approval processes.
Asset finance can be a powerful tool for startups looking to purchase equipment and technology without using up their cash reserves.
Sydney has emerged as Australia's retail powerhouse, while office markets across the country continue to face challenges.
Commercial properties leased to established charities are emerging as highly sought-after investments.
Australia's construction sector, with commercial and infrastructure projects reaching record levels while residential development declines.
Darren and Jenny have one child and are planning for his secondary education at a Melbourne private school. Utilising education bonds, they aim to ensure they have sufficient funds to cover all tuition fees and associated costs throughout his education.
As Australia's highest marginal tax bracket impacts more individuals, a growing number of Australians face rising tax obligations due to "bracket creep," where wage growth outpaces tax rate adjustments. This trend is expected to persist, with tax-efficient strategies the backbone for financial advice to help individuals secure long-term wealth.
Car loan refinancing involves replacing your existing car loan with a new one. The new loan pays off your existing debt, allowing you to start making payments on the refinanced car loan.
Lenders often view job stability and income consistency as key factors in their loan approval process, which can make it tricky if you're settling into a new role.
Making an offer on a property for the first time is both exciting and nerve-racking. It’s important to take several steps to ensure you’re making a well-informed decision
The presidential election in the US on 5 November could dominate headlines during October, before the next meeting of the Federal Reserve later that same week. Investors are already debating whether a further reduction in borrowing costs in the US could be announced following this meeting.
Melbourne's housing market has experienced a significant shift in recent years, with its median dwelling value now ranking sixth-lowest among Australia's capital cities.
Refinancing your home loan can be a great way to save money, but it’s important to avoid common pitfalls.
Spring is a popular time to sell homes, with warmer weather and blooming gardens creating an inviting atmosphere that brings out the best of any property.
Discover 9 essential financial planning tips to help new and expecting parents manage the costs of parenthood with confidence and ease.
Cash flow is the lifeblood of any business and when payments are delayed, it creates an immediate strain.
Small business loans are often misunderstood. These misconceptions can prevent owners from taking advantage of valuable opportunities to grow their businesses.
As Australia's highest marginal tax bracket impacts more individuals, a growing number of Australians face rising tax obligations due to "bracket creep," where wage growth outpaces tax rate adjustments. This trend is expected to persist, with tax-efficient strategies the backbone for financial advice to help individuals secure long-term wealth.
Discover 9 essential financial planning tips to help new and expecting parents manage the costs of parenthood with confidence and ease.
The Taxable Payments Annual Report (TPAR) is a mandatory report for Australian businesses in certain industries to disclose contractor payments to the ATO by August 28 each year, ensuring accurate tax reporting.
