Trust Circular #14 (Part 2): Engage a Trust To Minimize Company Tax on Profits

Hi Folks

Mark Pytellek here again, of Private Trust Makers (PTM), the makers of your Trust.

Here’s the next chapter of the Non Registered Trust story on how you can engage your Trust to favor your financial future.

To all our valued Trust clients, including the most recent new ones, welcome to our monthly free educational circular as part of our program to educate and upskill our Trust clients so they learn to competently use their Trust without having to run to and rely on lawyers or accountants, thus saving you time and money. The earlier Trust Newsletters are available, free, on our website www.solutionsempowerment.org within the “Non Registered Trust” section under the tab “Resources”

Today’s subject matter topic is “Engage a Trust To Minimize Company Tax on Profits”.

Notice 1 the information delivered below is not legal ad-vice.
Notice 2 I am not a practicing lawyer nor a Certified Accountant.
Notice 3 the information delivered below is strictly private and confidential, delivered for your personal benefit

Engage a Trust To Minimize Company Tax on Profits

Worldwide folks who are in business are searching for ways to either minimize or eliminate company tax. It’s a subject matter worthy of a book in itself.

There are many legitimate ways to minimize and even eliminate company tax.

We list a few non exhaustive options below.

Cashflow (Otherwise known as “Income” in the public realm) splitting so as to minimize tax and protect cashflow from being taxed

Under an oral or written agreement or contract, a Trust may be engaged by the company as an agent, sub agent, contractor, subcontractor, partner, consultant or other to:

Conduct transactions with it – purchase from, sell to,
Invoice for services rendered, consultancies conducted or goods purchased,
Hire services, goods, labour, from or out to, the company so as to issue invoices that are utilized for tax deduction purposes

To gift money, services, goods, assets, property or other to the Trust for either or both of, tax purposes and/or asset protection

Example “2” : Trust is engaged by the company as an agent, sub agent, contractor, subcontractor, partner, consultant

Whether the Trust is engaged as an agent, sub agent, contractor, subcontractor, partner or consultant by the company under an agreement or contract, the process is simple and the same.

You can draft a simple agreement or contract, or download an appropriate template from the internet that you can amend to suite your purposes, sign it as the Trust’s Trustee, and have the Director or a nominated employee of the company sign the agreement or contract on its behalf. Like any agreement or contract, the terms and conditions are disclosed, what tasks the Trust is engaged to perform, what consideration is provided by the company for the work or service performed or goods supplied etc.

The Trust invoices the company for the services it delivers to the company. By the company engaging the Trust under an agreement or contract, the consideration paid by the company to the trust for the services or work it performed, whether or not it performed any work or services, is a tax deductible item for the company, therefor reducing the amount of tax payable on the company’s cashflow or income.

Eg1. Earthmoving company with a team of independent subcontractors (subbies) with their own machines. The subbies are engaged with the company under contract. Engage a Trust (or more than one Trust) that acts as a subbie and invoices the company for work performed. You may have a cheap old machine sit in your yard as the machine owned by your subbie Trust and engaged under contract with the company!

You might engage another Trust as a marketing consultant, drumming up business/jobs for your company for which the Trust invoices the company, the payment by the company to the Trust being a legitimate tax deduction as part of the company’s operating expenses. Rule of thumb, the tax office is likely to accept the Trust invoice as a company deduction if it can be seen the marketing activity of that Trust is contributing to increasing the company’s cashflow. Assign some new jobs for the company to the results of the marketing activity of the Trust!

Eg2. In one case in 2013 a company appointed 4 Trusts and 4 Foundations, each as a subbie, to its pre existing team of 16 subbies so the effect of the extra 8 new subbies was to reduce the profitability of the company (on paper only) due to the new subbies each invoicing the company for work performed, the effect being there was a significant amount of the company’s cashflow being “mopped up” by payments made to the additional subbies, thus reducing the profitability of the company. It’s all about paper shuffling.

The opportunity to increase company deductions for tax purposes, and reducing profitability (only on paper), is only limited by one’s imagination and lateral thinking. There is no real remaining reason for any company or business to be paying significant tax, when simple mechanisms for escalating company tax deductions are easily available.

A rule of thumb is to ensure there is always some company profit remaining so some tax can be paid to the pirate so as to keep the pirate sufficiently happy to be receiving some tax.

We hope this information was useful and beneficial to you.

Next month we’ll look at the 3^rd example – “Gift money, services, goods, assets, property or other to the Trust”.

Look for the next Trust circular for further insights into practical and exciting applications of the use of your Trust.

Kind Regards,

Mark Pytellek
Principal
Private Trust Makers
in conjunction with
Solutions Empowermentment