Forums / Getting Technical / Finance / Tax implications to setup a company overseas

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  • Profile photo of StevenSteven
    Join Date: 2017
    Post Count: 174

    Hi all

    Would like to find out if anybody has any directions how to setup a structure that is most tax efficient. Not sure if this is the right forum or if this should go to the Accounting and Legal forum.

    So some basic run down:

    1. I may or may not transfer some money overseas (NZ to be more specific) to be used as a deposit.
    2. I will setup a trust in NZ, with myself as the beneficiary
    3. Some suggest that rather than putting myself down as a trustee, I should additionally setup a company in NZ and put myself down as a director of the company. The company then becomes the trustee of the trust.
    4. Some even suggest that rather than putting myself down as the beneficiary, I should setup a company in Australia and and put this Australian company as the beneficiary.

    So question then becomes:

    1. Suppose if I transfer an initial deposit to NZ (from either myself or my Australian Company to the NZ company / Trust). I do this as a loan and write a legal document stating in X years time, the money is to be returned with Y% of interest. (for argument’s sake, let’s say I transfer 50K, and the contract is written with 10% interest, so when the money is returned, 5K is returned from NZ to AU).

    2. Operating via the NZ Company / Trust, purchase a property for say 300K, and do a flip, sell it for 400K, making a 100K capital gain, return the 55K back to Australia, leaving 45K profit in NZ.

    3. The company / trust pay NZ tax in NZ

    4. In other words, there is no trading or capital gain under my name, though I am the director of the NZ company, and the beneficiary of the trust… but being a beneficiary, I get paid by dividends if I choose to benefit from it, but otherwise the Trust keeps all the Capital Gain, not me…

    What will ATO do in this case? Double charge tax from Australian perspective? How should I structure the whole thing so I only get charged tax by one end, rather than both ends?

    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,173

    You will need some complex and expensive legal advice.

    The trust will be a controlled foreign trust.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide)

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