There are not just the setup costs to
consider, trustees in a family trust are also liable to pay tax on any income
they get from the trust.
Adult and company beneficiaries pay tax on their share of the trust's net
income at the tax rates that apply to them.
And tax also needs to be paid on
If the trust income is not fully
distributed to beneficiaries, whether it's by choice or not, the trustees have
to pay tax on the income retained in the trust at the top marginal rate of 45%.
Then there are beneficiaries who
aren’t Australian residents - when trust income is distributed to someone who isn’t
a resident, the trusts have to pay tax on their behalf.
Trustees also have to pay tax on
behalf of beneficiaries who are under the age of 18, which is usually at the
top marginal tax rate of 45% (where the minor receives $1,308 or more).
Why so much?
Well, the high tax rate was put in
place to deter families from making trust distributions to minors.
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Friday, 16 June 2023