A statement by Townsends Law in response to the Opposition’s comments on discretionary trusts.
To say businesses or families are using family trusts in order to evade tax is absolute nonsense.
Overwhelmingly, they use trusts for two main reasons:
Firstly, for legitimate asset protection. Without trusts we would see a lot less entrepreneurship and risk taking by Australian business.
Secondly, for business succession and estate planning. Owning assets in a family trust, whether business or investment assets, makes it easier/simpler to pass on the benefit and control of the assets when the business owner dies or loses mental capacity.
In particular, there are few tax benefits to be gained from family trusts, because they rely on the trust being able to distribute income to family members on lower marginal tax rates.
Children under 18 don’t qualify, because they can only receive a measly $416 dollars a year tax-free from a trust with every extra dollar taxed at the top marginal tax rate.
Brian Hor
Special Counsel – Estate Planning & Superannuation
Townsends Business & Corporate Lawyers
t: (02) 8296-6204
m: 0401 122 338
Twitter: @TownsendsLaw
brian@townsendslaw.com.au
townsendslaw.com.au