- ptnParticipant@ptnJoin Date: 2006Post Count: 74
A friend came to me with a challenge. How to distribute $1M from his family trusts and minimise tax.
He bought a IP in 2005 in his trusts and sold it recently. After all expenses, he has a balance of $1m in his trust which he wish to distribute over a period of time.
1. Wife $100k, Husband $100k, leave $800k in trusts and pay 30% tax.
2. Wife $100k, Husband $100k, buy $800k worth of shares. Sell $200k worth of shares per year to distribute to husband and wife.
Wonder if you could distribute only the 50% CG tax exemption part only?
Any recommendations ?
ThanksTerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
Is it income or capital? or a bit of both.
Trustee will pay 47% on income retained in trust. Companies are taxed at 30%.
Buying $800k worth of shares is a capital expenses and not deductible so this won’t wipe out tax debt.ptnParticipant@ptnJoin Date: 2006Post Count: 74
The $1M is capital gain.
How would you distribute it to maintain minimum individual tax? Family Trustee are husband, wife and 2 kids under 16 yo.
Very interested in your response.
ptnTerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
Hard to say without knowing any details. Assuming they all beneficiaries worst case may be just under 25% tax. They should all sit down with their tax advisor and work it out – well in advance of 30 June