Why Use A Bucket Company?

Home | Tax Planning | Why Use A Bucket Company?

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!

“Bucket”
Company

$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.

Related News

Family Setup and Tax Return

Family Setup and Tax Return

Home | Tax Planning | Family Setup and Tax ReturnTrust Distribution Resolutions - Before 30 JuneTrustees who distribute income of a Discretionary / Family Trust to beneficiaries should sign a...

read more
Watch the Full Video of our Webinar Now!

Watch the Full Video of our Webinar Now!

Please complete the fields below to get the access of Free Webinar Full Video.

Thank you! Please check your email box for the link of the Webinar Full Video.

SIGN UP TO GET YOUR FREE BOOK!

Discover the Tax Tips for Property Investors.

Thank you! You have successfully subscribed.