Hi All,
My wife stops working end of June this year. I'm a sole trader under Australian law having a management contract working full time for 1 overseas company (of which I'm also a minority share holder, probably not relevant). As such currently I'm viewed by the ATO as not really a company (i.e. 30% tax) instead I'm paying the max income tax (> 45%) of $150K / year as if I were an employee. Currently I have no costs whatsoever to reduce my tax.
So I was reading about trusts. Am I thinking too simple if I'd say that it'd be possible to setup a family trust which receives all the income from the overseas company and then the trust gives $75K to me and $75 to my wife, effectively paying 30% tax each ??
Jim
It may be possible, but you will need specialist advice. The ATO has introduced measures to stop people doing what you are describing. They call it the 'Alienation of Personal Services Income'. There are various rules to overcome.
If it is an overseas company, then there may be opportunity for you to set up an entity overseas so that you could keep some money over there or in a lower taxed country. If set up properly you could do it legally, and reduce tax that way too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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