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An example of the tax savings possible with a family trust

This example is provided to give an idea of the scale of tax savings which can be achieved through proper use of a family trust. It is important to note however that advice from a trust formation specialist such as Company Solutions Ltd must be sought in order to achieve these savings and ensure your compliance with tax and trust regulations.

Please contact us for full details regarding proper family trust formation.

Joe and Joan Savewell, who have three student children, work in a family business and earn $140,000 which is split $70,000 each. Joe and Joan each pay $18,570 in tax which totals $37,140 for the family.

After taking advice from Company Solutions Ltd they decide to take better protection of their assets and make plans for their estate. They form a family trust with a corporate trustee J and J Savewell Limited, then sell the business to this trust. Incidently their home is sold to a separate trust to separate the business risk from their personal asset.

They receive independent written advice that the market rate for their type of employment is $40,000 each. The trust prepares an employment agreement with Joe and Joan and pays accordingly. The balance of the income made by the family trust, $60,000 ($140,000 less $80,000), is spread evenly between the 3 children at $20,000 each.

The total tax bill is now -

Joe and Joan	$8,070 * 2	=	$16,140
Children	$3,900 * 3	=	$11,700
	Total		$27,840
	Incidental saving in tax		$9,300

[Read on to find out more about the benefits which are available with a family trust]