Hey mate, great video. I started as a trainee accountant for a swanky firm with swanky clients when I was 20 years old in 1988. It was a golden era. And yes, we had lots of high-income clients who were distributing income to 6-month old babies. But one technical check: You said that back then you could give $18,000 to a child under 18. I assume you said $18k because that's roughly the Tax-Free Threshhold NOW. Back in 1988 it was $5,400. So whilst we were encouraging clients to distribute their income, we were also encouring them to have more kids. They could literally be a day old on 30 June. They didn't even need TFN's. But we could only give them $5400. But anyway, that's history. Your guidelines for the here & now were spot-on. Liked & subscribed. 😃
@@DavieMach 1988 was before a LOT of things were born - the internet (as we know it), mobile phones (that weren't as big & heavy as house bricks), & "portable computers" were literally the size of suit cases! And yet they were the best days of my life! Keep up the good work mate.
thanks for the video and info, a trust is also good for inheritance as it make probate more easier, as you asset asset under a trust is excluded from probate, which can be a lengthy process if your inheritance are left in a will
Thanks - great info and if only my accountant 14 years ago put my company shares into my super fund as now have to draw down proceeds slowly out of the trust and will take a lifetime (not my lifetime but my kids) Retired and still paying tax 👎🏼
Great video mate. Nice and easy to understand for non accountants. You need to up your fees though 😂 I quite often recommend the hybrid structure also but sometimes with a holdco between opco and holding trust. Mainly so that the retained earnings can be paid in franked divs to opco to be used for other investment purposes without the requirement to distribute taxes somewhere (like bucket company to minimise div 7a BS 😂)
Hi Davie, my question is 8:22 disadvantage of a trust- NO CGT discount? I think this is 50% discount if hold the asset more than 12 months. correct me if needed.
I’m 52 hoping to end the rat race by 60 with above $1M. I know money is a liability to be exchanged for assets with real value like real estate (properties for rent) stocks (dividends) bonds (interest) But, what is it with bitcoin? I hear a lot about it and I'd love to diversify my portfolio.
The key to financial stability is having the right investment suggestions for a diverse portfolio. Many investment failures and losses happen when you invest without proper guidance.
I went from no money to lnvest with to busting my A** off on Uber eats for four months to raise about $20k to start trading with Evelyn Infurna. I am at $128k right now and LOVING that you have to bring this up here
Evelyn Infurna Services has really set the standard for others to follow, we love her here in Canada 🇨🇦 as she has been really helpful and changed lots of life's
If having a business or investment through a trust with a corporate trustee, i understand the company tax is lower compared to an individual have a high income but arent you paying more in total if company pays 25% then when distributed to beneficiaries they pay tax on their income say 32% that would be a total of 57% tax on the income? Am i missing something?
You get a franking credit when distributing fully franked dividends. But the point is not to always just pay profits into the personal name and pay 47% tax. Reinvest the money at 25% or 30 % tax
You mentioned trusts get CGT discount but at 08:20 you said that they don’t. Which is it? Also, what’s the deal with negative gearing, can you benefit from it in a trust? Do banks only lend to a trust if it’s positively geared (ie meeting its obligations)?
@@Nerdificationing yes if you are selling your property that you own. There will be stamp duty. That’s why it’s best to get proper advice before you make the decision
Can you do some videos or more videos on how to pay less tax with loop holes or grey areas that millionaires and billionaires in Australia use, And examples with drawings or graphs that explain it Like when people get in the 10m-10b kinda money range and how to reduce it or pay no tax or as minimal as possible Especially if you have assets like crypto or anything that has capital gains basically that you can reduce beside the 50% 12 month hold discount other ways to reduce would be interesting to see how the elites and top guys do it
Thanks David. Ive been the sole Director of a shelf company (construction) for 30 years. As a working director, if i formed a trust, does the Trust have to pay workers comp payments.
If I transfer my crypto to a cook islands trust I'm told Im up for tax, but once I've payed that tax and the crypto that is in the trust goes up in value..? Im guessing yes. What if I moved out of Australia (after value goes up) to a no tax country (llike Dubai), would I have to pay tax on the crypto valuation rise? Thank you for your time.
Great content, I have a question based on the hybrid diagram - would an individual pay tax twice? Firstly via the business and secondly when the dividends are distributed as income?
@@davhong you get a franking credit which is similar to tax withholding in your gross wages. The ato gives you a tax credit on the dividends you receive on your company’s profit. That way you don’t get double taxed
Wouldn't your example on hybrid structure be better to pay tax inside company at 25% as. Opposed to going through the trust since the beneficiary rates are higher??
@@Rolls87 yes if you prefer the money in the company. But what if you need the money in your personal name or your family’s income is low, this method gives you the flexibility to do both when the situation gets better.
Bro you said if you are a sole trader then you can offset your personal income. I made 8k from uber last year and I had a loss of 17k so I had to deffer the loss as the taxable income as sole trader was less than 20k. I earned 90k from my full time job last year. I did not get any offset. Please answer
@@AhsanAli-ib4uz you need to pass the non commercial losses to be able to claim it. If you meet the income requirement and pass any one or more of the four tests, you can offset your business losses against your other income in the relevant year. The four tests are: assessable income test profits test real property test other assets test
Now what if yur revenue in the company is all PSI - personal services income - ATO requires company profits to be reduced by declaring Directors fees (taxed at personal tax rate) to stop leaving a big profit int he company and paying the lower company tax rate... Is a discretionary trust therefore beneficial for this type of revenue (PSI revenue).?
@@rob-neill-aus hard to say when PSI is a problem. Depends on the each situation and what your goals are with the profits. Best to get some paid tax advice from an accountant.
I don’t believe the trust advice about distribution to under 18 years olds is currently correct. I just landed in a family trust following my father‘s death and I did ask my accountant about paying a distribution to my son figuring that as he wasn’t working he would pay very little to no tax and my accountant told me that he would actually pay more than my personal income tax.
you cant distribute to minors or you get taxed at the highest marginal tax rate. The max they can get is $416 until they are hit with high tax. Where did i say you can distribute to under 18 years?
You say companies pay lower tax rates than individuals, but surely when you distribute the company profits as franked dividends this makes absolutely no difference because your effective tax rate is still your personal tax rate? You get a credit for company tax paid, so the company tax is just like a withholding tax. Am I missing something? Some short term advantage when you are investing your profits back into the business, but if you fully distribute your profits where’s the tax advantage?
I explain it in my deep dives. So have a watch of those videos. Being able to lower your tax on the profits and reinvesting that money to make more profits in the medium or long term can generate a lot more profit for you. And yes if your income is high when decide to take the money out later then you will get hit with the high personal tax rate but because your taxes are lower early on the compound rate of return will net a greater return in the long run. Some clients choose to retire and just take out dividends with franking credits that offset their income tax so they don’t need to pay anymore taxes as the tax is paid at 25% by the company already.
So... are you saying, if someone, let's say a builder has a family trust, and they did such a horrible job at building that the building collapse did to their dodgy work, and if they are sued for damages/ losses and if they show their have no money in their account, then you can't go after their assets because they simply have a trust? Makes no sense. If that's the case wouldn't most people get a family trust, be as dodgy as they can be and rest assured that no one can go after their properties because they have a family. Surely there must be a way to go after their assets if they are found guilty?
It is too complicated. The questions ? should we use company or trust for property investment? Why do you add this Emma & spouse of graphic design? So you mixed up and you have no focus on the research questions... ? We like trusts to buy 100 property portofolio or $ 200 million loan and get easy home loan. We don't care about emma graphic business... or get mixed up with the focus ?
Ok, sounds like your question is more complex - best to get proper advice or consultation. Spend the money and time so you set it up properly. This video is for information purposes only so you ask the right questions to your accountant.
Discretionary trusts should be made illegal. I have been exposed to discretionary trusts numerous times. Each time it is because a member of the discussionary trust has done things to his own competitive advantage at the expense of another company and because he is in a discretionary trust there is no way to remedy the situation because he doesn't own the shirt on his back. There is no way to suit the individual . And as ASIC has shown to do nothing to these people these con men can get away with everything and never get caught or punished.
Hey mate, great video. I started as a trainee accountant for a swanky firm with swanky clients when I was 20 years old in 1988. It was a golden era. And yes, we had lots of high-income clients who were distributing income to 6-month old babies. But one technical check: You said that back then you could give $18,000 to a child under 18. I assume you said $18k because that's roughly the Tax-Free Threshhold NOW. Back in 1988 it was $5,400. So whilst we were encouraging clients to distribute their income, we were also encouring them to have more kids. They could literally be a day old on 30 June. They didn't even need TFN's. But we could only give them $5400. But anyway, that's history. Your guidelines for the here & now were spot-on. Liked & subscribed. 😃
@@RonLucock yeah you are right! The tax free threshold was lower back then. Damn, 1988 was before I was born!
@@DavieMach 1988 was before a LOT of things were born - the internet (as we know it), mobile phones (that weren't as big & heavy as house bricks), & "portable computers" were literally the size of suit cases! And yet they were the best days of my life! Keep up the good work mate.
@@RonLucock damn I missed out then 😅 I thought the early 2000s were sick.
Thanks mate appreciate it
@ everyone. Report about this post
@@Sashimi889 Report what?
thanks for the video and info, a trust is also good for inheritance as it make probate more easier, as you asset asset under a trust is excluded from probate, which can be a lengthy process if your inheritance are left in a will
This is brilliant Davie. So well explained. Big fan of your offerings.
Another great vid 🎉 thanks for taking the time Davie!
@@Riccardo_123 thanks mate I really appreciate you watching
Thanks - great info and if only my accountant 14 years ago put my company shares into my super fund as now have to draw down proceeds slowly out of the trust and will take a lifetime (not my lifetime but my kids)
Retired and still paying tax 👎🏼
This is why I pay for WI-FI, new subscriber
great videos you put out, straight to the point detail
Thank you 🙏
Well done, best explanation.. not even my accountant could do this 😂
@@MrBruster78 haha most accountants have bad communication skills
@@DavieMachtell me about almost 3 weeks to hear back from him for a simple question 😆
@@MrBruster78 lol 5 days mate and I never said I had good communication skills hahahaha
Well made video, good presentation. Subscribed
Mate that was very good and informative
Great video! Thanks for explaining
Great video mate. Nice and easy to understand for non accountants.
You need to up your fees though 😂
I quite often recommend the hybrid structure also but sometimes with a holdco between opco and holding trust. Mainly so that the retained earnings can be paid in franked divs to opco to be used for other investment purposes without the requirement to distribute taxes somewhere (like bucket company to minimise div 7a BS 😂)
thank you, very helpful and informative.
Hi Davie, my question is 8:22 disadvantage of a trust- NO CGT discount? I think this is 50% discount if hold the asset more than 12 months. correct me if needed.
@@emmama5841 yes that’s wrong shouldn’t be a disadvantage and yes there is a cgt discount!
I’m 52 hoping to end the rat race by 60 with above $1M. I know money is a liability to be exchanged for assets with real value like real estate (properties for rent) stocks (dividends) bonds (interest) But, what is it with bitcoin? I hear a lot about it and I'd love to diversify my portfolio.
bitcoin does not pay any yield but will reward you with growth that you can't find in any other asset class
The key to financial stability is having the right investment suggestions for a diverse portfolio. Many investment failures and losses happen when you invest without proper guidance.
Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things
I went from no money to lnvest with to busting my A** off on Uber eats for four months to raise about $20k to start trading with Evelyn Infurna. I am at $128k right now and LOVING that you have to bring this up here
Evelyn Infurna Services has really set the standard for others to follow, we love her here in Canada 🇨🇦 as she has been really helpful and changed lots of life's
well explained Davie
If having a business or investment through a trust with a corporate trustee, i understand the company tax is lower compared to an individual have a high income but arent you paying more in total if company pays 25% then when distributed to beneficiaries they pay tax on their income say 32% that would be a total of 57% tax on the income? Am i missing something?
You get a franking credit when distributing fully franked dividends.
But the point is not to always just pay profits into the personal name and pay 47% tax. Reinvest the money at 25% or 30 % tax
Could you do a video to bring this clarity to a self managed superannuation fund?
You mentioned trusts get CGT discount but at 08:20 you said that they don’t. Which is it?
Also, what’s the deal with negative gearing, can you benefit from it in a trust?
Do banks only lend to a trust if it’s positively geared (ie meeting its obligations)?
How do you move a property into a trust - do you have to repay stamp dury?
@@Nerdificationing yes if you are selling your property that you own. There will be stamp duty. That’s why it’s best to get proper advice before you make the decision
Can you do some videos or more videos on how to pay less tax with loop holes or grey areas that millionaires and billionaires in Australia use,
And examples with drawings or graphs that explain it
Like when people get in the 10m-10b kinda money range and how to reduce it or pay no tax or as minimal as possible
Especially if you have assets like crypto or anything that has capital gains basically that you can reduce beside the 50% 12 month hold discount other ways to reduce would be interesting to see how the elites and top guys do it
its on the cards - thanks for the suggestion :)
Thanks David. Ive been the sole Director of a shelf company (construction) for 30 years. As a working director, if i formed a trust, does the Trust have to pay workers comp payments.
So, in the example, the company's profits are first taxed at 25%, then upon distribution to Emma another 45%..... ? ?
If I transfer my crypto to a cook islands trust I'm told Im up for tax, but once I've payed that tax and the crypto that is in the trust goes up in value..? Im guessing yes. What if I moved out of Australia (after value goes up) to a no tax country (llike Dubai), would I have to pay tax on the crypto valuation rise? Thank you for your time.
Thanks for sharing
Great content, I have a question based on the hybrid diagram - would an individual pay tax twice? Firstly via the business and secondly when the dividends are distributed as income?
@@davhong you get a franking credit which is similar to tax withholding in your gross wages. The ato gives you a tax credit on the dividends you receive on your company’s profit. That way you don’t get double taxed
👍thanks
I learned something
I learned I need to find an accountant
Wouldn't your example on hybrid structure be better to pay tax inside company at 25% as. Opposed to going through the trust since the beneficiary rates are higher??
@@Rolls87 yes if you prefer the money in the company.
But what if you need the money in your personal name or your family’s income is low, this method gives you the flexibility to do both when the situation gets better.
Bro you said if you are a sole trader then you can offset your personal income. I made 8k from uber last year and I had a loss of 17k so I had to deffer the loss as the taxable income as sole trader was less than 20k. I earned 90k from my full time job last year. I did not get any offset. Please answer
@@AhsanAli-ib4uz you need to pass the non commercial losses to be able to claim it.
If you meet the income requirement and pass any one or more of the four tests, you can offset your business losses against your other income in the relevant year. The four tests are:
assessable income test
profits test
real property test
other assets test
Now what if yur revenue in the company is all PSI - personal services income - ATO requires company profits to be reduced by declaring Directors fees (taxed at personal tax rate) to stop leaving a big profit int he company and paying the lower company tax rate... Is a discretionary trust therefore beneficial for this type of revenue (PSI revenue).?
@@rob-neill-aus hard to say when PSI is a problem. Depends on the each situation and what your goals are with the profits. Best to get some paid tax advice from an accountant.
I'm favoured, $22K every week! I can now give back to the locals in my community and also support God's work and the church. God bless America.
I don’t believe the trust advice about distribution to under 18 years olds is currently correct. I just landed in a family trust following my father‘s death and I did ask my accountant about paying a distribution to my son figuring that as he wasn’t working he would pay very little to no tax and my accountant told me that he would actually pay more than my personal income tax.
you cant distribute to minors or you get taxed at the highest marginal tax rate.
The max they can get is $416 until they are hit with high tax.
Where did i say you can distribute to under 18 years?
I didn’t finish listening my bad 😂 thanks 🙏
@@jmginthent651 haha all good! Thanks for watching
You say companies pay lower tax rates than individuals, but surely when you distribute the company profits as franked dividends this makes absolutely no difference because your effective tax rate is still your personal tax rate? You get a credit for company tax paid, so the company tax is just like a withholding tax. Am I missing something? Some short term advantage when you are investing your profits back into the business, but if you fully distribute your profits where’s the tax advantage?
I explain it in my deep dives. So have a watch of those videos. Being able to lower your tax on the profits and reinvesting that money to make more profits in the medium or long term can generate a lot more profit for you.
And yes if your income is high when decide to take the money out later then you will get hit with the high personal tax rate but because your taxes are lower early on the compound rate of return will net a greater return in the long run.
Some clients choose to retire and just take out dividends with franking credits that offset their income tax so they don’t need to pay anymore taxes as the tax is paid at 25% by the company already.
@ yes good point.
hey Davie, is it possible to run a company in Australia that's owned by a trust overseas in a non-tax country and not pay any tax ?
The Australian company will still pay Australian tax and require an Australian resident director.
So... are you saying, if someone, let's say a builder has a family trust, and they did such a horrible job at building that the building collapse did to their dodgy work, and if they are sued for damages/ losses and if they show their have no money in their account, then you can't go after their assets because they simply have a trust? Makes no sense. If that's the case wouldn't most people get a family trust, be as dodgy as they can be and rest assured that no one can go after their properties because they have a family. Surely there must be a way to go after their assets if they are found guilty?
No I am not saying that. Structuring helps give you a layer of protection. I am no lawyer so I cant comment on the specifics of how it works.
It is too complicated. The questions ? should we use company or trust for property investment? Why do you add this Emma & spouse of graphic design? So you mixed up and you have no focus on the research questions... ? We like trusts to buy 100 property portofolio or $ 200 million loan and get easy home loan. We don't care about emma graphic business... or get mixed up with the focus ?
Ok, sounds like your question is more complex - best to get proper advice or consultation. Spend the money and time so you set it up properly. This video is for information purposes only so you ask the right questions to your accountant.
Where in the title does it say that this video is specifically for property investment?
What happens when you lose your Trust in a Company :)
@@lumeronswift then you just got to rely on your soul (trader)
Running a company / trust in communist Australia is foolish. (Fulltime daytrader here that has my structure offshore)
No
Discretionary trusts should be made illegal. I have been exposed to discretionary trusts numerous times. Each time it is because a member of the discussionary trust has done things to his own competitive advantage at the expense of another company and because he is in a discretionary trust there is no way to remedy the situation because he doesn't own the shirt on his back. There is no way to suit the individual . And as ASIC has shown to do nothing to these people these con men can get away with everything and never get caught or punished.
Thumbs down for saying, "more better"