Family Trusts

Family trusts can be a very effective way to split income between family members by vesting income producing assets into the trust. With a discretionary trust, the trustees can decide which family members are entitled to the income in any given year, and how much income they should receive.

It allows for a reduction in the family's overall tax expense by utilising tax free thresholds of other family members as well as their different tax bracket.

However, the issue of vesting a business in a trust needs to be considered carefully. In many cases where people have tried to split business income by vesting the assets in a whole trust, the whole arrangement has fallen over. It was deemed to be a non-commercially motivated sham to avoid tax and therefore fall short of the anti-avoidance principals.

If you're interested in setting up a family trust, or are concerned that your trust might not be compliant, call us now for a confidential discussion about your needs.