Does this sound like you? You run a successful family-owned business through a private company. Over the years, your company has accumulated profits that could help fund personal investments or assist family members. Like many SME owners, you see no harm in accessing these profits informally. After all, it’s your business, right?
Subdividing your land is a great way to release money for other projects as the prices of Australian real estate continue to climb. However, the tax consequences of subdivision and development are complicated. Getting the details wrong could cost you up to 100% more tax than you would otherwise be required to pay.
It is well understood by savvy property investors that holding investment properties in a trust can offer the benefits of asset protection, estate planning and tax efficiency. The next question is whether these benefits extend to the family home. In other words, is it worth holding your family home in a trust?
Put simply, once an individual has aggregate land holdings of $2.5 million, they will benefit from using discretionary trusts in their structuring strategy.
The specific terms of your trust deed can mean you will either save or lose money in income taxes. It is important your deed is up to date and gives the trustee all the powers it needs to optimise the trust’s tax position.