I’d love to shed some light on what we call ‘Bucket Companies’, also called:
Why this strategy is so critical, is because it can help cap your tax rate at 30%.
And as a quick refresher, as a sole trader you can pay up to 51% in tax (including the temporary budget repair levy).
The idea of a bucket company is that they take ‘excess’ profits, after distributing a reasonable amount to the people within a family group.
Bucket Companies are incredibly useful
If done right, Bucket Companies can generally save thousands of dollars in tax for a client, year on year.
Let’s use an example of a trust earning $300k in profit. But we’ll review the tax rates first.
For every dollar in tax we save a small business, we give a family in need a days worth of access to life changing help. Here are some of the impacts -