colonel

Is this only applicable to Self-Employed tax-payers ? Or can a normal employee open a discretionary trust fund and claim the tax back when if comes to tax return time ?

I reckon I could "share" approx. $39k of a cash salary of $70k to other family members...thus leaving tax to pay on only $31k ! I will be speaking to a tax accountant when I arrive me thinks !

BadgeIsBack

Normal caveats apply:

The 30k or so you disperse to the OH I think will still be taxed - just at the basic rate. Obviously you'll still be ahead then but not as much as if you earnt a 6 figure salary or somewhere where a higher (maximum) rate kicks in of ~40+ pc. So you might, say, end up getting say a tax-free portion, then eg. a 10pc portion + 20pc portion on the 30k rather than 30pc across the board. Who knows, the savings on the OH dispersal might pay for the week's grocery shop...tax brackets is what makes it work, I'm guessing here.

Obviously if it's tax-free then there is nothing to worry about.

It's important not to disperse too much as the ATO can then take notice and think you're taking the piss. The rulings and case studies point to what you can get away with.

JBJ14

On $70k it's not a massive benefit, but I would split it down the middle to keep under the $38k tax bracket

JBJ14

You can be on a subcontractor agreement, depends how flexible the company is. This does have it's possible drawbacks though

JBJ14

No real catch, like people have pointed out before, you will have to meet certain criteria to be able to push it through a trust. A normal employee won't be able to do it.

Best idea is to try to get it below $80k for each distribution if possible, this maximises the benefit.

Idea is to help out with the income tax burden between family members, at 277k you will be paying much more tax than if you and your OH earn 135k each. Brings the equality back, it's a great tax idea I think which helps out single earners in larger families where some family members can't work.

elice_in_oz

So for example, if my OH went back into contracting (he's on a permanent contract ATM on a decent but not sky high salary) for say $900/day, which would bring his yearly income into the highest bracket, could we then set up a trust to try and save on tax? Would I have to be NOT working at all, or just under a certain income level, to be able to benefit? It might be worth my while staying out of work

JBJ14

Yeah nice try Don't think giving up income is ever a benefit!

Sounds like you're in a perfect spot for a family trust to me! Takes a bit of playing around, but set up a spreadsheet and do some test figures. But with your OH on over $200k I would definately be passing that around in the trust!

Eg if you're earning $50k then he could pass $75k to you .. meaning you both earn $125k in total. You both stay under the highest bracket then!

elice_in_oz

Wow, thanks for that! I'll definitely look into it before he goes off and looks for a new job! Karma coming your way

JBJ14

You could always adopt me and pass $100k on to me

elice_in_oz

You'll have to make do with karma I'm afraid...
Unless you are house-trained, can do the laundry, cook, clean the bathrooms and entertain the kids... Then I might think you are worth 100k

joho

I am slightly embarrassed , my hubby's take home is 5200 not the other, not sure what I was thinking. so our monthly take home is around 7,600, having said that we still live comfortably.

Jo

airlineguy1980

I know I m not that rich enough for trust fund.let's say if you work in Australia if your home base company pays for your tax more than 18 percent.housing provided with annual holiday paid is 50000 doll is good enough.we are a small family with one 3 yr old kid.anyone give an idea about Sydney or Melbourne .is the above said figure is good

lauralollipop

thanks for your help JBJ, hubby will deaf look into that with his employer as there are others doing it there already - my hubby earns around 118k and I don't work as I am a student and we get by, but we struggle to keep up the lifestyle we would like (having overseas holidays and a decent car) and thats just for 2 of us! We don't have a huge mortgage either, about 250k but we do need a bigger house and we are struggling to move up the housing ladder with stamp duty and house prices etc........Perth is just so expensive

JBJ14

No problems, glad to help out!

Perth is definately expensive, cost of living has really shot up over the last 5-10 years! Just got back from Canada, and it makes you realise how much we pay here ... I think we get used to it until we see costs elsewhere!

cubeonly

No it's not enough.