Home – New Forums Money matters Should Trust Run Business or Trust be the Shareholder of Company

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  • #988192
    gwu2
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    Hi, we are considering to move the company structure under the trust, the accountant advised us to use trust as shareholder, have corporate trustee. It would be less structure change, the business as usual. However, we don’t like the idea of the profit already being 30% upfront before any distribution. Otherwise we could move all business assets to trust and run the business under trust, corporate trustee; but have to change ABN, bank account and Tax file no. Then, all customers will notice business change; the title on the invoice change.

    Which of options give us more tax benefit and flexibility in future, I know both provide asset protection. However, I believe the second option allow better tax advantage than the first one.

    After 3 meetings and discussion, it already cost us $1650 before any actions taken. I don’t know if it is worthwhile even some works include contact other parties and gather information. Which structure is better choice? we could not make up our mind. Any suggestions are welcome!

    #1166095
    TehCamel
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    something else to help you weigh up your decision.

    I don’t beleive it’s possible to sell a trust as a business. Nor to bring in outside shareholders if you need capital.

    #1166096
    Jimmy1
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    A corporate trustee does not often have to disclose it is acting on behalf of a trust so you still invoice your clients with the company name albeit with a different ABN.

    The usual setup is a trust with corporate trustee but personally I like the trust owning the company setup. One reason is as TehCamel said.

    The 30% company tax you pay gets distributed as a credit through the trust with the dividends.

    If the trust owns the business it may not pay tax (although taxing trusts like companies comes up every so often) but the beneficiaries will and possibly upfront instalments.

    Transferring shares to the trust is simpler than transferring all the business assets to the trust. Since you already have the company set up I would choose simply transferring the shares to a trust and continue business as usual.

    In the end tax will all work out taxed to individuals either way. When faced with a decision the simpler option is the one I go with.

    #1166097
    James Millar
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    Has your accountant advised on the tax implications of transferring the business or shares to a new entity?

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
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