Tax Savings Strategy 205 | Company Shares Owned by Family Trust
This strategy involves having a company’s ordinary shares owned by a family trust structure (instead of the individual directors). This applies irrespective of whether the company operates a business or holds investments. The advantages of this strategy include:
- Provides asset protection – If the directors personally go bankrupt then the company is protected as the shares in the company are owned by the family trust.
- Enables the company to pay fully franked dividends to the family trust which can then be streamed to beneficiaries in the most tax effective manner. Beneficiaries in low tax brackets will have some (or all) the dividends franking credits refunded to them.
- Ability to distribute fully franked dividend income to adult children (aged over 18 years) who are either studying or working part-time and are in low tax brackets. If $18,200 is distributed to a child studying fulltime then they benefit from having the franking credits refunded.
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2