Hi,
Is it possible for the directors of the corporate trustee to draw a wage from all types of Trusts ?
Yes.
Agreed – provided that the trust deed does not prohibit the arrangement.
Eddie
[email protected]Please advise why a trust would have this arrangement in place ?
Thanks.
Why wouldn't it? Most trust deeds allow a trust to pay an income to a trustee for managing the affairs of the trust. Most trusts are also allowed to run a business and pay wages as well. They are usually very flexible.
But why pay a wage? Why not just pay a distribution instead. If you pay a wage then you need to worry about superannuation and tax.
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
Terryw wrote:Why wouldn't it? Most trust deeds allow a trust to pay an income to a trustee for managing the affairs of the trust. Most trusts are also allowed to run a business and pay wages as well. They are usually very flexible.But why pay a wage? Why not just pay a distribution instead. If you pay a wage then you need to worry about superannuation and tax.
Good point, Terry. The only instances I have seen wages being paid was when the trust consisted of several big personalities in families and everyone wanted to deal with the DT at arm's length, so the "active manager" who looked after the trust was treated as an employee under a bona fide employment arrangement. Also, paying wages may come in handy if the person is an outsider of the family for the purpose of the Family Trust Election and any distribution to whom may have triggered the Family Trust Distribution Tax.
But you're right, it's just easier to pay a distribution in 99% of the cases.
Eddie
[email protected]
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