This tax tip I want to share here is: Work your family trust.. Now, what we mean by that is if you're trading through a family trust, or maybe your family trust owns shares in the company that runs your business, we want to make sure you're using that to your absolute potential.
A couple of things to remember with discretionary trusts (aka family trusts) is that they can distribute their profit to people in the family group - you can change who that gets allocated to each year, which is a pretty cool feature. So we want to make sure we're distributing it to the people that make the most sense from a tax perspective, or any other perspective that we want to consider.
Most family trusts or discretionary trusts can distribute to the business owners themselves, the spouse, the kids (but there's limitations to that) - basically any of the more immediate family members like parents, sometimes grandparents, or brothers and sisters of the business owners, and in-laws. There are certain limitations and you do have to read your trust deed to make sure who you can distribute your money to, so make sure you double check that.
You also need to document who is getting this profit before 30 June of every single financial year. So you actually have to have a trust distribution minute - that's something that we do as part of our client's tax planning process. Once we've had that discussion with them of who's the most appropriate beneficiary, we actually document that for them and get them to sign that off.
The other thing about family trusts and making sure you get the most out of them, is with the more recent trust deed, we can actually distribute different streams of income. That's a bit of an accounting term, but what that means is, if your trust earns multiple different types of income (maybe it gets business income along with interest on term deposits or bank accounts, and that might get dividends) we can actually send those different forms of income to different beneficiaries - that also might make sense or have a better outcome on our tax position.
So, again, we want to make sure your trust deed is up-to-date, and we can update that if needed to bring it into some of the more recent rules around trust distribution streaming. But also we need to have a look at that for who can actually receive the money, and that's called the "beneficiaries". So this is just an encouragement - If you've got a family trust in your business structure, make sure you're using it to its absolute potential in your family situation.