Tax Savings Strategy 206 | Private Investment Companies

The benefits of using a private company to accumulate investments include:

Company tax rate of 27.5% (which will eventually reduce to 25% by 2025).
Ability to retain profits after tax (important in the lead-up to retirement when individual taxable incomes can be high).
Fully franked dividends can be accumulated tax free due to the dividend imputation system.
Borrowing with banks is much more-simple and straight forward than through a trust structure.
Once the individual taxpayers are retired (and in receipt of tax free superannuation benefits) the profits can be distributed as dividends. Two retired spouses could take out a franked dividend of $96,180 each per year and pay no additional tax due to the attached franking credits of $41,220.
Can contribute additional investment funds to the company at any time.
Can access cash from the investment company at any time (through director’s loans, share buy backs, or dividends).
Companies have perpetual succession (so useful for estate planning purposes).

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