Pty Ltd company setup

[chuggles]

Hello Evanron

If you decided you wanted or needed a company to trade with the public then you could simply have the private trust as the sole shareholder. Each year you could distribute unfranked dividends of 100% of excess funds from the company into the trust. The company therefore has no ‘income’.

I don’t know what business you are doing however is the company necessary? By having a company you have accounting fees, ASIC fees and potentially other compliance matters.

Regarding protecting assets the entity that trades to the public should never own anything. Intellectual property could be held by the trust and licensed to the company. Real assets could again be held by the trust or you the living man and leased to the company. That way if the company gets targeted for any reason it has no assets to lose.

• This reply was modified 2 years, 3 months ago by  chuggles.

[evanron]

I have the company already, and it is actively trading. as i progress into setting up my trust, i was hoping there was a way to structure/restructure the company to give my assets to the trust as either a gift, as this is new to me i was hoping for some guidance.

[chuggles]

Hello Evanron

You have numerous options so without knowing the details of your situation here is some food for thought.

Firstly you could ‘sell’ the shares to the trust, however this could have capital gains implications. This way all the ‘income’ of the company would belong to the trust.

Secondly the trust could hold the trading name or intellectual property the company uses and charge a fee for it. The fee would legitimately transfer funds from company to trust.

Thirdly the trust could offer services to the company and invoice. For instance this could be your energy. This again would transfer funds from company to trust.

Fourthly you could just assign the ‘income’.

I personally like options 2 and 3 however you will have to consider what is best for you.

[marcus-500]

Hi evanron,

I have a similar situation, I’m looking into whether I can use a registered trust, that is owned by a non registered trust. The Registered trust can trade in the public, be Gst registered, has an ABN etc, and it has to distribute income to its beneficiaries at the end of each year, but its untaxed distributions.

I think with company option paying dividends to the trust, the company must pay tax before it distributes, so you would be losing 25% corporation tax before it does its distribution to the trust.

[morag-janet-of-the-hill-family]

Trust-and-business-Q-and-A-8.pdf 76 KB PDF - Click to view

Options

• Copy Download Link

[brianchu82]

Hi Janet,

That was a useful document. Thank you!

Just want to clarify a few things.

What is the difference between me using my public company to pay franked dividends to myself as an individual taxpayer and declaring my income at the end of the year as $500 which is what I as a private individual pay to my taxpayer status managing my assets, and setting up a private trust where I receive the franked dividends paid from the public company?

Also, as an individual taxpayer who is also the director of the public company for which I am self-employed, how do I legally set out the public company paying rent, insurance, meals and vehicle expenses as I conduct the business affairs for the public company? Do I need to register myself as an employee of the company and thereby pay wages and fringe benefits or can I just present receipts of these to the ATO if they request an audit and simply state that the company pays part of my sustenance and this is an expense the company incurs, without a reciprocal income to me as an individual taxpayer?

Thank you for your help.

God bless,

Brian

[morag-janet-of-the-hill-family]

Hi Brian the best person to ask about this is Mark as he has worked extensively in this area in his personal life through the vehicle of an unregistered Trust. He could give you options of pathways through these questions. The best way to have a meeting with him is to either 1. Purchase an unregistered Trust and then as a part of the package you get a 1 hour zoom meeting with him 2. Look out for the next Q and A webinar and attend and ask your questions there 3. Attend the next webinar and ask in the Q and A section at the end of the webinar.

[bec-smith]

…further to my previous comment…the mgt/admin fees become a deduction for your company so can reduce any taxable income for the company.

[brianchu82]

Hi Bec,

Thank you for the advice. I will soon set up an unregistered trust and then use that to invoice the company for services rendered, thereby allowing it to be tax deductible for the company and allowing us to draw from the trust for our sustenance.

I just have to get the ATO off my back so the company has more spare funds to use for setting up the trust. We are almost over the line on the discharged tax liability.

God bless,

Brian

[bec-smith]

Brian

There are numerous strategies you could deploy in regards to continuing operations in the registered company – but as the Director you may choose not to receive a fee or wages – your private trust or foundation can invoice to company for Admin and Management Services – which your company then physically pays – either by withdrawing cash or transferring to the foundation/trusts own bank account – the trust can then provide the sustenance to the founders/volunteers – the invoice received by the company doesn’t have an abn but in order for the company to remain ato compliant your private trust/foundation will provide an ABN Supplier statement (ie it doesn’t need one) so it is not registered for GST and it doesn’t need an ABN.

[brianchu82]

Thanks for your advice, Janet.

I realised that there was a special for an unregistered trust last month but I am quite new to this site so I didn’t purchase it. Might have a look to see when a special offer may appear again.

I guess the other is to pay him or another of his associates to discuss.

God bless,

Brian