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Leon
Leon, Solicitor
Category: Australia Law
Satisfied Customers: 43703
Experience:  BEc Dip Ed, Dip Law (SAB) MTax (UNSW)
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I have just created a discretionary trust. I have an ex

Customer Question

Hi I have just created a discretionary trust. I have an ex partner who has devoured my bank account and is still hungry for more. My daughter and I are the beneficiaries. I want to know if I got paid straight into the trust instead of my account if I would get double tax and if she could still devour more funds. Also I'm really unsure how to effectively utilise a trust. How many things I can gift to it a year, should I employ myself in the trust, how to not be devoured by the ato and my ex partner. If your answer is long. I am the trustee of the trust as well. If you need to right a big response please use my email address: *****@******.***
My name is***** can u please use my email address for I am at work and at a loss. Please reply. I look forward to your answer. Thank you.
Submitted: 1 year ago.
Category: Australia Law
Expert:  Leon replied 1 year ago.
Good Morning
My name is ***** ***** I am a NSW Solicitor. Thank you for your question, and will do my best to assist you with your question.
Have you and your ex partner got court orders to finalise your property?
How long ago did you separate and am I correct in assuming you were not married?
Customer: replied 1 year ago.
We were not married and we have no property.
Customer: replied 1 year ago.
Separated 8 months ago
Expert:  Leon replied 1 year ago.
Good Afternoon
He has 2 years from the date of separation to make a claim through the courts.
If you move assets now the court will reverse the transfer and give him a share.
The law will apply the following 4 steps
Step 1: Determine what the assets are and their value
This will include all assets and their value as at the day that you are dividing them. It does not matter whose name the assets are in, they will form part of the matrimonial pool. Superannuation entitlements are also included.
Step 2: Determine what contributions you and your spouse made towards the assets.
This includes a consideration of both financial and non-financial contributions. Consideration is given to what assets each of you brought into the marriage as well. The weight given to your initial contribution will be dependent upon the length of your relationship. The longer the relationship the less weight given to the initial contribution.
Step 3: What are each of your future needs.
Consideration is given to your respective ages, your comparitive income earning capacity as well as other factors.
If these things don't balance equally for each spouse, then an adjustment is made in the percentages.
Step 4: Make an order that is just and equitable between both spouses
If you can he can reach your own agreement that is best. if not then I suggest you lay low until 2 years pass and once they do make the changes and if he brings an action he is out of time.
I hope this makes sense and is of assistance.
If there is nothing further thank you for using my services.
If I have missed anything, or you have any further questions please let me know
If there is anything else in the future please do not hesitate to ask.
Please do not forget to leave positive feedback.
Regards
Leon
Customer: replied 1 year ago.
The other part of the question was how I can best utilise a trust, getting my pay put into it. Tax, do I get double taxed? I am unsure how to best utilise a trust??
Customer: replied 1 year ago.
I'm the trustee of the trust. You answered one part o my question. Which I thank you for. But primary I need to know how to use the trust. Referring to my first question.
Expert:  Leon replied 1 year ago.
Good Afternoon
The trust is taxed in the hands of the trustee on the income it earns. So you should have a corporate trustee and then any income it earns is taxed at 30%
If it earns no income there is no tax.
If you are the trustee and also a beneficiary then it may be an issue because it may be seen that it is you that is the real owner if there is any court action.
Are you running a business? If not you cannot have your pay paid into the trust. You are an employee and you have to be paid.
The Trust can give away funds and assets depending on what the Trust deed says. If it is a discretionary trust then that mean the trustee decides how the funds are distributed and to who.
I hope this answers your question?
Customer: replied 1 year ago.
If I applied for an abn for the trust would that be better for tax purposes. I'm going to start working as a subcontractor and wanted to use the trust as who I work for. Or is that to hard. Do I need to register a company pty ltd, make it the trustee, get paid into the trust which probably gets 50% tax, pay the trustee company which will pay 30% tax on that then decide what to pay me as the director of that company. I need to know how to be clever with the trust???
Customer: replied 1 year ago.
All this to minimise tax.
Customer: replied 1 year ago.
Thank u for your reply before as well it was helpful.
Expert:  Leon replied 1 year ago.
Good Morning
If your trust is to trade as a business then you will need an ABN.
It is not too hard but you have to make sure you have the correct set yo and your accountant will assist with this.
You have to set up the Company and then make the company Trustee.
The Trust then enters the contract and is paid. You are an employee. The trust pays you and income and withholds tax. As the Trustee is a company the Trust is taxed at 30% of the total income it earns.
It separates you from the trust.
Your accountant will tell you whether it is a tax benefit or not.
Good luck
You are very welcome and thank you for using my services.
If I have missed anything, or you have any further questions please let me know
If there is anything else in the future please do not hesitate to ask.
Please do not forget to leave positive feedback.
Regards
Leon
Expert:  Leon replied 1 year ago.
Good Morning
I'm just following up our discussion earlier this week and seeing whether there is anything else I can assist you with.
If I have missed anything, or you have any further questions please let me know.
If there is anything else in the future please do not hesitate to ask.
Please do not forget to leave positive feedback.
I look forward to hearing from you.
Regards
Leon
Customer: replied 1 year ago.
Does the tax rate for a trust change from 46% or so, if it has an ABN? How many things can you gift it a year? Can you sell it something and forgive the payment? If so how many times can you do it? Every time the trustee (myself) changes something, e.g change of trustee. Do I need to go get a justice of the peace to stamp, date, sign documents or how is
It done? A lot of questions I know.
Expert:  Leon replied 1 year ago.
Good Morning
A trust is taxed at the rate of the trustee.
If you are the trustee then the tax s at your top marginal tax rate. If the trustee is a company then it is 30%.
What you can gift is dependent on the trust deed.
You may waive the payment but you there will still be stamp duty if you mean property and also capital gains tax if it is not your home at the market rate.
If you change trustees you need to have a new document prepared and the names on all property changed.
If you add beneficiaries you pay stamp duty on the rust as you resettle it.
Your accountant can explain all this to you.
They are the ones that have to give you this advise before you set it up.
Good luck. If there is nothing further thank you for using my services.
If I have missed anything, or you have any further questions please let me know
If there is anything else in the future please do not hesitate to ask.
Please do not forget to leave positive feedback.
Regards
Leon