Share Tax Structure

Discussion in 'Accounting & Tax' started by Trailblazer, 18th Mar, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Trailblazer

    Trailblazer Well-Known Member

    Joined:
    13th Sep, 2017
    Posts:
    105
    Location:
    OZ
    I'm trying to determine the viability of setting up a structure that will legally minimize tax and protect assets for now and in the future. I'm looking to have something before I start deploying capital for long-term buy-hold and high yielding shares/REITS/ETFs during this downturn.
    What are the future implications to consider having it under personal name vs trust or company? Currently single, low tax bracket, and would like to have a partner and kids down the line (5-10+ years) but that's really an unknown and not guaranteed. So let's assume i'll have no kids within 10 years.
    Would setting up a trust make any sense? Especially if i start increasing my income from higher yielding securities.
     
    Trailblazer, 18th Mar, 2020
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,978
    Location:
    Australia wide
    See my thread of this in my legal tips
     
    Terry_w, 18th Mar, 2020
    #2
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,517
    Location:
    Sydney
    If you are single there may be no merits for the foreseeable future. The extra costs of trust v personal need some thought as the extra costs of setup and annual tax etc will accumulate and make not produce a benefit. eg So the trust produces a profit it will distribute to ...you and also likely cost $2K to setup and $1K a year or more. That could be the game for 10 years. Deferred gains (in this market ??) may be taken in the future but not to minors.
     
    Paul@PAS, 18th Mar, 2020
    #3
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,978
    Location:
    Australia wide
    Terry_w, 18th Mar, 2020
    #4
  5. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,343
    Location:
    Australia
    How much are you investing?
     
    Trainee, 18th Mar, 2020
    #5
  6. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,343
    Location:
    Australia
    Terryw’s tips are gold here and you also need professional advice.

    but a few things to consider.
    How much it will cost to set up? (Couple of thousand dollars?)
    Who would you distribute income to? If no other beneficiaries (parents?) you might use a bucket company.
    Running costs.
    Asset protection do you really need it? Are you in a high risk job?
    When might you have a partner? What might their income be?
    Estate planning? Trust assets do not form part of your estate.

    say you currently have a spouse with no income and you have children, then the streaming benefits are more immediate. And maybe with a medium term view of your kids turning 18 and maybe at uni and not working, and the streaming benefit increases.
     
    Last edited: 19th Mar, 2020
    Trainee, 19th Mar, 2020
    #6