Imagine you’ve got an amazing business that is trading through a Trust.
You take out some profit to feed yourself, feed your family, put the kids in school and live comfortably.
But you still have some excess profit left over!
If you take it out, you’ll have to pay up to 49 percent tax.
What do you do?
Now the strategy here is actually to set up a company.
The purpose of this company is to receive a distribution from your business.
It’s a distribution of profits of your business.
So here’s where the tax savings come in …
Individuals pay up to 49 percent tax, but companies when they’re receiving a distribution from a trust, they only pay 30 percent tax.
So paying that profit to a company instead of an individual will save you 19% tax – 49% minus 30%.
Important: You can’t just do this distribution ‘on paper’.
The cash must go from your business into your company and into the company bank account.
Then you can use that money to invest in anything else like commercial property, residential property, you can invest in shares with the money in the company.
You may know these company structures by the following names –
- A company
- A Pty Ltd
- A corporate beneficiary and even
- A Bucket Company
I like to think of it as your “Family Vault”.
It’s a smart place to store the profits your business AND reduce the amount of tax you’re paying.
Got a burning question about using Business Structures to save tax and create a family vault?
Book in, to TEST DRIVE AN ACCOUNTANT – a 15 min rapid fire Q & A session with an Inspirational Accountant.