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Family trusts

While the ATO continues to crack down on its tax minimisation strategies, quite a few legal pathways to paying less tax while preserving wealth for retirement or estate planning purposes still exist.

Family trusts have significant tax-saving abilities, and can save high-income earners a fair amount of money over a few years by apportioning wealth to members in lower income brackets via a strategy called streaming.

Streaming income allows trustees to place a high proportion of the trust’s earnings into the names of their adult children (who are subjected to a lower marginal tax rate). Using the kids’ $18,200 tax-free threshold also means the investment income is not be taxed, and franking credits would are refunded. However, if children are below the age of 18, it may not to use this strategy since any investment income they earn above $416 attracts a much higher tax rate.

While streaming is a great option for minimising a family’s overall tax burden, it is not always a straightforward practice and may warrant professional advice. Here are two tips when using the family trust structure for tax purposes:

Take advantage of the tax-free thresholds: Make sure to take advantage of the $18,200 tax-free threshold if you have younger members in the trust, by transferring a higher allocation of the trust’s investment income to them.

Put capital gains and franking credits with low-income earners: Placing a higher proportion of profits to low-income earners can result in huge tax savings.

Posted on 4 September '15 by , under Tax.

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The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
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Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

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