Buying property with Trust using company "dividends"

Hi all

Was wondering if I could get some tax professionals input to my situation.

I have a sizable amount of profits after making some successful investments. These profits are trapped inside a Pty Ltd as franked div's which I own 100% shares in.

I already have 6 digit salary, so any distributions from this company would push me into highest tax bracket - it would take me decades just to get this money out without incurring the wrath of the bracket creep.

I've being looking into making investments into property under a trust and use surplus funds from the company and distribute rental profits to my family members.

I understand any related party transactions would involve div7a - which I would like to avoid if possible

If I set up a discretionary trust with corporate trustee, and have my original Pty Ltd company act as shareholder of the corporate trustee (think of it as a subsidiary) and my family members as beneficiary - would this be a workable solution?

I will be asking my accountant about this however he is on leave until next month - and I'm really keen to start on this.

 

div7A would apply if a trust but no a company

 

1. TradingCo Pty Ltd could lend to the trustee of the new trust. On commercial terms. Div 7a likely applies so the rate may be higher than a bank lender. Depending if its secured or not the term could be short. A secured loan ? P&I applies. No IO. Rights of a liquiidator to "call" the loan need to be given legal advice.
2. TradingCo Pty Ltd could invest in a subsidiary company to avert Div 7a. But there is no disc trust. No loan needed. BUT seek legal advce on how asset protection works. A creditor of Newco Pty Ltd may have access to property equity. Shares in that company would be owned by TradingCo not a trust. But there could be other shareholders. But this could leave a minority interest (at best?) held by the trustee.

Div7A was drafted to be a catch all and many events come back to this tax law.

 

Or set up a new company owned by a discretionary trust. This company borrows from trading company