How much do I expect to pay to run family trust?

[tropic]

We are planning to establish a family trust.
Nothing complex, just to distribute income.
Mostly from shares and we own them outright.
My wife is going through a medical treatment.
I think it is beneficial for us to set up a family trust for now and the future.

How much do I expect to pay the yearly running costs?
Will be a simple trust I presume and has minimal transactions (to start with).

Thank you.

 

[Mry]

Typically the only running costs for a family trust are accounting fees (and perhaps bank fees). This could vary depending on the advice or service you want, how you present information to your accountant and what the accountant regularly charges.

 

[tropic]

So it doesn't incur auditing costs like corporation?

Are we expecting a big change in discretionary trust?
http://www.dynamicbusiness.com.au/f...ry-trustee-ato-law-changes-business-2317.html

The main reason we want to have one is to take advantage with income distribution.

 

[Terryw]

Will the trustee be paid for their work as trustee? That is another potential cost. But if you are doing at all yourself = the trustee of 'your' trust then most do not take a fee.

 

[Terryw]

So it doesn't incur auditing costs like corporation?

Are we expecting a big change in discretionary trust?
http://www.dynamicbusiness.com.au/f...ry-trustee-ato-law-changes-business-2317.html

The main reason we want to have one is to take advantage with income distribution.

That must be an old article. A recent case in the QLD Supreme court has come done in favour of income streaming of trust income, suggesting it may be around for a while longer.

 

[pickle pickle]

The major cost I see with your family trust is accounting fees. As you plan to have shares in the family trust I think it'll cost at least $1000 a year in accounting fees.

The other issue you need to consider about owning shares in the family trust is CGT. Are you going to just purchase shares in the familly trust name, or transfer shares you own into the family trust. If you are going to transfer shares, you may have a CGT liabilty. That could be a huge cost.

 

[tropic]

My wife and I will be the trustee and that part won't cost the trust anything.

The article was published in January 2011.

Good to hear that the law will still allow income streaming.

Regarding CGT tax, well I have some capital loss that I can offset.
So it shouldn't cost us much.

I think I will go ahead with a discretionary trust.
We are waiting to hear back from our accountant.
I think I will pay someone to do it properly.

Thank you.

 

[austini]

I must admit I haven't monitored recent Trust events too closely. However if I understand the ATO's issues surrounding "Streaming" then even if the ATO were successful in being able to disallow the streaming provisions of the past as long as each beneificiary receives a "proportional" share of any capital gains and franking credits etc relative to their income distribution then there shouldn't be any problem? Can anyone confirm this as be a correct interpretation?

And of course if you are not distributing to a Corporate beneficiary then there is little to fear with recent changes in this area.

Cheers - Gordon

 

[Terryw]

My wife and I will be the trustee and that part won't cost the trust anything.

The article was published in January 2011.

Good to hear that the law will still allow income streaming.

Regarding CGT tax, well I have some capital loss that I can offset.
So it shouldn't cost us much.

I think I will go ahead with a discretionary trust.
We are waiting to hear back from our accountant.
I think I will pay someone to do it properly.

Thank you.

Hi Tropic

There was some sort of announcement yesterday by the Govt that they will continue to allow tax streaming:

http://www.theaustralian.com.au/bus...en-clarifies-law/story-e6frg8zx-1226016135056

 

[austini]

Thanks Terry,

I read about the Government's Friday announcement stating that streaming would continue to be allowed in yesterday's Fin Review and just hopped on to post accordingly. However you beat me to it. So it would seem that it's business as usual as least for a little while.

Cheers - Gordon

 

[brucea]

If you have just shares and cash in your family trust the tax return will be quite simple. Download the Trust tax return and instructions from the ATO website (nat0660 and nat73751 respectively) and have a quiet read one evening.

If you've done your own personal return you'll find it no harder than that. If you've ever handled a relative's deceased estate then you've already done a trust return - it really is trivial when the investments and tax issues are simple.

 

[tropic]

Hi Bruce,

Has nat73751 been changed. I can find it on the ATO website.
Thanks for pointing to the right direction.
I will spend time reading it.

 

[brucea]

Been changed? Do you mean you "can't" find it? The online version is here:

http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00241480.htm

It's no longer available as a pdf (must be a cost saving exercise by the ATO) but you can click on the Printer icon and it will format the entire document in one webpage from which you can 'print' it to a pdf creating virtual printer like CutePDF.

And you can download the tax return here:
http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00237548.htm

 

[tropic]

Thanks Bruce. I couldn't find it yesterday.
I hardly go to ATO site. It's definitely worth a read.