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Why Do The Rich Love Company and Trust Structures in Australia So Much?.

Article by WealthSafe.

Date Published: 24 Sep 2013

One of the things I hate is the amount of tax we pay in Australia.

I find that is the biggest gripe of my rich clients.

“I work long hours, 60 hours per week minimum, to make big money, only to give half of it away to the taxman”, said one of my disgruntled rich clients to me recently.

“My business contributes a lot to the economy. I give people jobs. I sell a good product. I work hard. Yet it so sucks that the government takes half of it and gives it to these undeserving parasites”.

Some would say the last part is over the top. But I’m sure you see what he is saying.

The amount of tax we pay in Australia totally sucks.

So the question is, do companies and trusts still work to minimize tax?

The answer is a resounding yes! Companies pay only 30% tax. And Tony Abbott has hinted that he will reduce the rate to 28.5%. Good news.

And trusts allow you to income split. You can give money to the people who pay the least amount of tax in your family. Or to a spare company and keep tax at 30% (or 28.5%).

Click here to read my article on trusts, where I give some examples.

Or for the more serious reader, I have written a book on trusts. In this book I have covered the most frequently answered questions with companies and trusts. Click here to download your free copy

Or if you don’t live by the “fast food” mentality, and can wait for your money, your reward is you can slash your tax even more. You can use superannuation and only pay 15% tax.

To show you how important it is, consider this.

Robert Kiyosaki in “Rich Dad Poor Dad” and “Cashflow Quadrant” gives 4 things that he believes is critical for you to learn to become financially independent:

  1. Your Business/Product/Skill
  2. Sales and Marketing
  3. Accounting and Tax Planning
  4. Law

This is also my experience in dealing with thousands of wealthy clients over the years. The rich do have a very good knowledge in accounting and law. And use companies and trusts.

And use self managed superannuation funds. For example, a common trick is to own their business premises (commercial property, the super rich seem to prefer them to residential property) in their self managed superannuation fund. This keeps capital gains tax at 10% maximum. And also ensures that they will only pay 15% tax on their rent rather than 30-45%.

Is it a lot of work to do all of this?

You bet your life!

But tell me, is it worth it?

Is it worth putting in an extra 10 hours, for example, to save $10,000 in tax?

That is an effective hourly rate of $1,000 per hour, tax free!

Conclusion

So in conclusion, the rich use company and trust structures in Australia to slash their tax and protect their assets. They are as effective today as they ever were.

Click on my recent article Trusts Still Stand Triumphant for Asset Protection in Australia, says Court to read more about trusts.

Book Your Free
Tax Saving Assessment.

Wealth Safe
 

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