{"id":8181,"date":"2023-09-18T12:02:32","date_gmt":"2023-09-18T02:32:32","guid":{"rendered":"https:\/\/adelaideprivatewealth.com.au\/trusts-and-the-new-super-tax-rules\/"},"modified":"2023-09-18T12:02:32","modified_gmt":"2023-09-18T02:32:32","slug":"trusts-and-the-new-super-tax-rules","status":"publish","type":"post","link":"https:\/\/adelaideprivatewealth.com.au\/trusts-and-the-new-super-tax-rules\/","title":{"rendered":"Trusts and the new super tax rules"},"content":{"rendered":"
\n

Ensuring you\u2019ve structured your finances tax-effectively is always a concern, but with new tax rules for super on the horizon, many people with large balances are considering alternative vehicles to save for retirement.<\/strong><\/p>\n

Unsurprisingly, this has sparked a renewed interest in an old favourite \u2013 trusts.<\/p>\n

Trusts have always been popular in Australia, with the government\u2019s Tax Avoidance Taskforce (Trusts) estimating more than one million<\/span><\/a> were in place in 2022.<\/p>\n

\"\"<\/p>\n

Separating ownership using a trust<\/span><\/h3>\n

The popularity of trusts for business, investment and estate planning purposes is due to both their flexibility and inherent benefits, particularly when it comes to managing your tax affairs.<\/span><\/p>\n

At their heart, trusts are simply a formal relationship where a legal entity holds property or assets on behalf of another legal entity.<\/span><\/p>\n

This separation means the trustee legally owns the assets, but the beneficiaries of the trust (such as family members) receive the income flowing from the assets.<\/span><\/p>\n

A common example of a trust structure is a self managed super fund (SMSF), where the fund trustee is the legal owner of the fund\u2019s assets, and the members receive investment returns earned on assets held within the SMSF trust.<\/p>\n

Which trust is best?<\/span><\/h3>\n

There are many different types of trusts, with the appropriate structure depending on the financial goals you\u2019re trying to achieve.<\/span><\/p>\n

For small businesses and families, the most common trust is a discretionary (or family) trust. These vehicles are very flexible and can be used with immediate and extended family members, family companies or even charities.<\/p>\n

In a discretionary trust, the trustee has absolute discretion on how both the income and capital of the trust are distributed to various beneficiaries.<\/span><\/p>\n

This gives the trustee a great deal of flexibility when it comes time to allocate income to family members paying different marginal tax rates.<\/span><\/p>\n

Advantages of a trust structure<\/span><\/h3>\n

Discretionary trusts offer tax, asset protection, estate planning and property holding benefits.<\/span><\/p>\n

They can also assist with the accumulation of assets for younger generations within your family and provide opportunities for the discounting of <\/span>capital gains<\/span><\/a>.<\/span><\/p>\n

For small businesses and farming operations, a discretionary trust can be used to provide valuable asset protection. If your business goes bankrupt or a beneficiary is divorced, creditors will be unable to access assets or property held within the trust as it is the legal owner of the assets.<\/span><\/p>\n

Building wealth outside super<\/span><\/h3>\n

With new tax rules for super fund <\/span>balances over $3 million<\/span><\/a> being introduced, trusts also provide a useful tool to consider for continued wealth accumulation.<\/span><\/p>\n

Unlike super funds, trusts don\u2019t have annual contribution limits, restrictions on where you can invest or borrowing limits. Money can be added and removed from the trust as necessary, providing significant financial flexibility.<\/p>\n

Discretionary trusts can also be used with vulnerable beneficiaries who may make unwise spending decisions. The trustee can decide to provide a spendthrift child or a family member with a gambling addiction regular income, but not large capital sums.<\/span><\/p>\n

Holding ownership of assets within a trust is useful for estate management, as the assets will not be part of a deceased estate, avoiding the possibility of a Will being challenged.<\/span><\/p>\n

Trusts aren\u2019t always the solution<\/span><\/h3>\n

Although trust structures provide many benefits, there are also tax issues that need to be considered. For example, any trust income not distributed to beneficiaries is taxed at the <\/span>top marginal rate<\/span><\/a>.<\/span><\/p>\n

Distributions to minor children are taxed at <\/span>higher rates<\/span><\/a> and a trust is unable to allocate tax losses to beneficiaries, so they must remain <\/span>within the trust<\/span><\/a> and be carried forward.<\/span><\/p>\n

Trusts can be expensive to set up, administer and dissolve when they are no longer needed and the trustee\u2019s actions are restricted by the terms of the trust deed.<\/span><\/p>\n

If a family dispute arises, running a trust can become difficult and making changes once it is established isn\u2019t easy.<\/span><\/p>\n

If you would like to find out more about trusts and whether one is appropriate for your business or family, call us today.<\/em><\/p>\n

The post Trusts and the new super tax rules<\/a> appeared first on MLC Contemporary<\/a>.<\/p>\n<\/div>\n

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Ensuring you\u2019ve structured your finances tax-effectively is always a concern, but with new tax rules for super on the horizon,…<\/p>\n","protected":false},"author":4,"featured_media":8182,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15],"tags":[],"acf":[],"yoast_head":"\nTrusts and the new super tax rules - Adelaide Private Wealth<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/adelaideprivatewealth.com.au\/trusts-and-the-new-super-tax-rules\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"asim_stellar\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/adelaideprivatewealth.com.au\/trusts-and-the-new-super-tax-rules\/\",\"url\":\"https:\/\/adelaideprivatewealth.com.au\/trusts-and-the-new-super-tax-rules\/\",\"name\":\"Trusts and the new super tax rules - 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