As with a family trust, your trading trust
allows you to protect your assets and can
be used for income splitting which provides
you considerable tax savings. A trading trust
differs from a family trust however, in that
it has a corporate (company) trustee.
Rather than having several named trustees,
the sole trustee of a trading trust is a limited
liability company. Instead of taking trustee positions in their
own name, the trustees of your trading trust
become directors of your trustee company. This links your trust structure with a company
structure, providing the advantages of full
limited liability protection for your business
and also personally for the individual trustees. In addition to tax advantages, you also gain
the ability to trade with your company using
a name that is completely different from your
trust. Setting up your trading trust allows you
asset protection and income splitting.
you put your business assets into a trading
trust, you effectively reinforce the limited
liability that comes with a business structure,
the benefits of which include:
your asset protection.
limiting your personal liability.
When you pay your principals - i.e. the directors
of your company - by way of salary, you attract
levies on that salary such as ACC. Your trading trust allows you alternatives
such as the ability to pay all profits by way
of beneficiaries’ income; thus you avoid such
levies. Note: it may be preferable to independently
insure against this risk. Depending on your
company and trust structure, your trading trust
can often allocate income to various beneficiaries
in a more effective way than the example above.
While a trading trust suits most types of trading
businesses and services, some business types
(such as those in which income is from an individual's
own personal exertion) may not suit a trading
trust structure. This precludes you, for example,
if you are a sole practitioner using your own
personal exertion and selling time rather than
selling goods. There are however business structures available
that may be of use to people trading in these
circumstances. Whatever your trading trust or business structure
needs, Company Solutions Ltd. are the experts
to turn to for friendly and effective guidance.
For more information or to further discuss
your requirements, please feel free to contact