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Minimise Minors unearned income tax

Discussion in 'Introductions' started by cacun, 29th Aug, 2010.

  1. cacun

    cacun New Member

    Joined:
    28th Aug, 2010
    Posts:
    1
    Location:
    canberra
    Hi everyone
    I would like to distribute between 10 and 20k to my 3 children quarterly. I havea family trust set up but dont really understand it and what to do. Also is there any other way besides the trust that I can distribute these funds with minimal tax implications. I have seperated from thier mother and she is a low income earner.
    Any thoughts greatly appreciated.
     
  2. TDFawaz

    TDFawaz Tony

    Joined:
    1st Jul, 2010
    Posts:
    40
    Location:
    Brisbane, QLD
    lol! I wish I had a father like you!
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    You can pay them each $416 each year without any tax implications. You really don't want to go above this figure, because you'll then pay 66% tax on the next $890 of income and then 45% above that.

    See here for more info: http://www.ato.gov.au/print.asp?doc=/content/20046.htm

    Assuming their mother is still a beneficiary of the trust, you could look at paying the money to her on the understanding that it is for the children's benefit (no way of enforcing that though - she could do with it what she wants in reality). That would increase her tax burden, so you'd need to come to an agreement with her about it all - and it would only work if you trusted her to do the right thing by your children.

    Obviously you need some professional advice here - but hopefully someone else here can make some useful suggestions?

    Perhaps also have a look at Dale Gatherum-Goss's "Trust Magic" book, which is an excellent source of tax hints and tips: Trust Magic (Powered by CubeCart)