Why Use A Bucket Company?
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%
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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