#Accounting Answers: Self Funded Retirees

#Accounting Answers: Self Funded Retirees

So remember young family, small business equals family trust or discretionary trust as the ideal structure for 9 times out of 10.

If you don’t understand how your structure works, or you don’t feel you’re in the right structure we absolutely need to talk, but let me give you a really cool example about how you might be able to dramatically decrease the amount of tax you’re paying this year by asking your parents for a bit of a hand.

This is one for self-funded retirees.

road map. accounting answers

Your parents are retired. They’re self-funded. They’re not on the pension from Center Link, but they’re funded through hard work, their own retirements through living off their superannuation now, or living off of money that’s in their self-managed super fund.

Let’s say this year you worked really hard, and you earned $200,000.

Your choice now, if you were to pay that in your own name is paying $0.47 in the dollar of tax on that $200,000. Let’s say we were distribute, and this is the beauty of the discretion that comes with a discretionary trust, is let’s say we were to distribute $37,000 to both mom and $37,000 to dad.

This is how things would perform, the first $20,000 they would be paying 0% tax compared to in your own name 47% tax. Pretty cool.

From $20,000 to $37,000 they’d be only paying 21% tax whereas you would have been paying 47% tax.

With all of those powers combined, on $200,000 by distributing 37 each to mom and dad, if they’re self-funded retirees, you’d be saving $27,640 in tax.

Now you see what I mean when I say that discretionary trust or having the discretion about who, how, and when the tax paid is so good for young families.

If you’ve got self-funded retiree parents, and you think you might be able to use this strategy, absolutely give us a call, and not only can they be helping out with babysitting, but they also might be able to help out by taking a trust distribution for you.

I’ll talk to you one on one about who actually pays the tax because they don’t have to.

Let’s talk. Can’t wait to meet you.


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