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putting wages into trust fund?

Discussion in 'Accounting, Tax & Legal' started by Dreamliner, 8th Jan, 2012.

  1. Dreamliner

    Dreamliner New Member

    Joined:
    3rd Jan, 2012
    Posts:
    2
    Location:
    surfers paradise,qld.
    Hi guys, Please can someone tell me - how can I transfer employee earned wages into a discretionary trust fund? I earn $140000 per annum and would like to transfer it to a trust fund with a co. as trustee and family as benerficaries.
    I know the best way would be for me to work with my employer as a sub-contractor but at tye moment its not an option.
    My colleague told me he - gets his trustee co. to loan the money from himself(his wage), is this workable n legit ?
    I have searched around the net for answers, next wil be to find a good tax accountant om the gold coast or brisbane.
    thanks in advance.
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Do you want the taxable income to be earned by the trust?

    If you just want to get the money into the trust you can gift it or lend it to the trust.

    If you want the trust to earn the money so you can then split it amoungst the beneficiaries then it is much harder. Your trust would need to enter into a contract with your employer and earn the money. You would also need to overcome the alienation of personal services income rules in the tax act.

    Your friend's idea won't work. Do you mean 'borrow' (instead of 'loan'). A trust borrowing money from you won't help because you are still being taxed on it. Charging the trust interest will only mean you have more interest to pay.

    If you meant 'lend' then this won't help either as if the trust lends you money it won't effect income tax. If the trust charged you interest it could help, but the interest would only be deductible if you borrowed that money for investment purposes. Charging a higher interest rate may help but you would have to make sure the funds are at market rates or the ATO may disallow it. If the loan is unsecured then you may be able to do this and it could help divert the money into your trust to a certain extent - eg. borrow to pay for investment property expenses from your trust. ATO may still be able to apply part IVA if the only reason you do this is for taxation reasons.
     
  3. Dreamliner

    Dreamliner New Member

    Joined:
    3rd Jan, 2012
    Posts:
    2
    Location:
    surfers paradise,qld.
    Hi and thanks very much for your reply, I appreciate it.
    Looks like I am stuck just earning this wage and "payg" tax until I can secure work as a sub-contractor.