Trusts can be an important tool for managing your financial affairs.
They can protect your assets from claims of aggrieved creditors, and in the case of discretionary trusts can provide significant flexibility in the allocation of income received by the trust when distributed to beneficiaries of the trust.
A family trust is a special type of discretionary trust, and is often used as a vehicle for the carrying on of a business in Australia.
The business is carried on by individuals or a limited company acting in the capacity as trustee of the family trust.
The family trust obtains an Australian Business Number, which allows a business name to be registered with the Australian Securities and Investments Commission (ASIC).
The business is then carried on, with profits arising then capable of being allocated or distributed between the beneficiaries – usually members of the family carrying on the business. Flexibility in the allocation of profits from one year to the next allows for the equalisation of taxable income between family members, and hence a reduction in the total tax payable on business profits.
Compared with other types of business structure such as a limited company a family trust is more complex to administer. This said, setting up the trust structure is more expensive, but thereafter the annual costs should not be markedly higher than the more rigid business structures.
In other words tax savings can quickly exceed the cost of setting up the trust structure.
More complex business structures can involve family trusts, such as partnerships of family trusts – this type of structure is commonly encountered with professional firms.
If establishing a family trust structure is of interest we recommend that you obtain professional advice from a firm such as bdh Tax prior to setting it up.
bdh Tax can assist with the setting up of a family trust for you, as well as ongoing support, including:
- Obtaining a Tax File Number and an Australian Business Number for the trust from the Australian Taxation Office
- Registering a business name with ASIC
- Assisting with book-keeping, payroll administration, and the lodgment of quarterly Business Activity Statements
- Preparing trust minutes, for example to record the distribution of trust income
- Preparing the annual accounts and the tax return of the trust – and trust beneficiaries – for submission to the Australian Taxation Office
Whenever possible bdh Tax provides a fixed fee quote to all who are interested in engaging our services.
If you want to discuss setting up a family trust in Australia please don’t hesitate to contact us by completing the enquiry form on this page, or by telephoning your nearest bdh Tax office.
We look forward to hearing from you.