TRUST WITH INDIVIDUAL TRUSTEE

CASE STUDY

INDIVIDUAL TRUSTEE
After receiving his trade certificate and gaining some valuable experience as a sub-contractor, Les decided to start his own plumbing business …..

Les is a plumber

Les seeks advice from his accountant and decides to set up a trust to allow for future tax planning and splitting of income.

To save costs associated with the setup, Les chose himself as trustee instead of a company, or corporate trustee.

A trust structure provides greater scope

After 2 years of independent contract plumbing work Les is offered a substantial plumbing contract for a unit development with 70 units. The contract would require him to supply all plumbing materials and engage a team of plumbers.

A trust structure also provides greater scope for further tax planning by interposing other entities, eg company or trust, as a beneficiary.

Problems

Les immediately realises that he needs to review his trust structure and replace himself as trustee with a company.

In doing so he can retain all his current ATO registrations, bank accounts and other business related contracts.

 

 

A Bit Messy

By Resolution – The schedule in the deed still shows the original trustee. A minute records the resignation and appointment. Any future financial or contractual arrangements must include the original deed and the minute – A bit messy.

A Cleaner Method

Deed of Variation – This is a separate legal agreement that varies the original trust deed. The deed of variation forms part of the documentation of the family trust and details how the trust deed has been changed.  This is a cleaner method and one that most businesses will understand.

 

 

Starting A Business? Do I Need A Plan?

When planning to start a business, there are many things to consider: some financial, some conceptual, and others just plain practical. In the 80's and 90's we could count on a certain percentage of clients working as employees, transitioning to some form of business....

Business Partners Non Related Parties Case Study

BUSINESS PARTNERS CASE STUDY THE PARTNERS ARE NON RELATED PARTIESJoe and Adam are plumbers who have both worked together on various construction sites....Long Term Friendship Joe and Adam have been building a great long term friendship over the years and decide to...

Stories From The Trenches – Business Principles

Today I want to share a brief story of a young couple operating a business. It is a real story about real clients that highlight planning principles in small businesses. Case Study Some years ago, a young couple operating a business asked me to look after their tax...

25% Tax Rate FY 2022 – More Reasons To Set Up A Pty Ltd Company

From 1 July 2021, the new company tax rate in Australia is 25%. If you intend to start a business, a company may be the best business structure to start with. For some business start-ups, liability protection is important. However, the new company tax rate of 25% is a...

How to register a business or trading name

If you're wondering how to register a business or trading name, this may help point you in the right direction. Australia's national business names register is managed and maintained by the Australian Securities Investment Commission (ASIC). For the uninitiated,...

Sole Trader Entity Setup Case Study

ENTITY SET UP CASE STUDY SOLE TRADER Three years ago, when Michael was young, kind of single and life was fairly uncomplicated.... Michael is a Physiotherapist Michael established his own physiotherapy clinic. Uncertain about how a new clinic would go and without...

Pin It on Pinterest

Call us