Why Use A Bucket Company?

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Why Use A Bucket Company?

A “bucket company” allows you to “cap” the tax on profits distributed by a trust to
30% or 27.5%. This is much less than the individual top marginal rate of 47%!

Assume a trust earns $250,000 in profits from business or investment.

OPTION 1. Distribute profits 50/50 to individuals 1 and 2 ( inc Medicare Levy payable) = $70698 (28.28%)

OPTION 2. Distribute $90,000 each to individuals 1 & 2 and distribute balance of $70,000 to a “bucket” company at a 30% tax rate . Total tax payable = $61,874 ( 24.75%)

Value of strategy is $8,824 in tax saved!


$70,000 Income from Trust
taxed at lower rates of
30% or 27.5%

Future franked dividends
go to Shareholders

Uses Cash to:

  • Invest in shares, properties and loan funds to other companies
  • Should never operate a business or engage in risky activities.

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