Spot on @Remorhaz. The admin burden is a pain, but at least very much front-loaded. After that, it's basically business as usual.

Another thing to think about is continuity. If you hold shares personally and something happens to you, the accounts can be frozen for months during probate. With a company structure, the entity lives on meaning the family can usually access cashflow and dividends much faster without the legal runaround. Worth considering.

I'm somewhat similar to @Solvetheriddle for structure, although I dropped the trust sometime ago when I retired and didn't need the additional cost @thetjs.

Having used this setup since the mid-90s, I have to agree with @BigStrawbs70 about the ongoing cost and overall benefits that flow to cover these cost (say $3-4k+ per annum for a Pty Ltd just for registration and tax and similar for the trust). That said, I have been sucking the franking credits out of my Pty Ltd as a distribution each year to maximise tax returns since retiring 8 years ago, to great affect. Once that is emptied in the next year or so I'll also shut that entity down and stick with personal investments and my SMSF. BTW (as I've detailed in previous posts) I sold most of my Pty Ltd shares to my SMSF (off market) in March 2020, so I also have a good pool of capital losses to offset the future gains when I do sell the final shares and shut this entity down.

So in summary, the costs over many years can be substantial and there are no CGT discounts in a Pty Ltd. However, it did work out great for me, but mainly due to being in a position to transfer/sell shares to my SMSF when the market tanked in 2020. My original reason for having a Pty Ltd and Trust was due to partners in my business (that had everything in their wives name and I was single), not as a major tax minimalisation strategy.

Thanks @lowway & @Solvetheriddle

Apreciate the insight from your experiences. Hadn't even considered the franking credit element of the equation.

Cheers.

Hi @thetjs.

I'm the highest income in our household, a salary employee.

I hold investments in my inidividual name and via a family trust. The trust has my partner and I as individual trustees (not a corporate entity).

I am, over time, moving all investments from my individual name into the trust. All new investments are in the trust.

If my parnter and I ever separate (not impossible), I will seek to distrubute what is needed, but maintain the trust post separation.

Next, I want a bucket company or holding company as another beneficarary. As once it is tax-ineffective to distribute to the partner, and child, the left over will flow to the bucket company, for use as @Solvetheriddle describes.

It was easy to make the first investments dividend payers that cover the annual cost of the setup, tax return, any future ongoing registration etc.

No complications on trading via cmc.

Minor timing/mood complication on funding the cmc account, as my partner, as co-trustee, needs to secondary-approve cash transfer from the trust bank account to cmc.

As an aside. My father was a sole trader, and salaried employee, and use the above setup also.

Remember the purpose - you always have to pay tax. But this kind of process lets you choose when you pay it.

I believe the ATO has raised concerns around the corporate beneficiary to a trust tax loophole haven't they?

@Mujo , there have been concerns for decades. The trust's tax questions are quite complex, and given the difficulty in getting the super changes through, which are immeasurably easier, in my opinion, it will be very hard to change imo. lets see. The first port of call is the use of bogus beneficiaries, that is, where the tax-free threshold is used for children or partners and the beneficiary does not see the money. again hard to police but an obvious pace to start.

@Mujo As per comments by @Solvetheriddle, you are correct.

However it is highly dependent on the context and how the trust and the business-as-a-beneficiary are setup as to whether it "attracts ATO crabs" or not.

It is something that costs specialist and formal advice, hence the ongoing annual costs to ensure one gets it legally correct ... or correct in a way that is plausibly deniable - after all the end state is to be tax-efficient, not undertake tax-avoidance.

Thanks @BigStrawbs70 the context is great. I feel like that cost/effort part is what I wont be able to understand until I'm in it. Part of the consideration is also do I run the assumption that it will be helpful in a 'better to have it, than not' and revist it later down the line if it's shown not to be worth it.

Cheers @reddogaustin. Apreciate the insight.

Agreed on the purpose RE tax. This is very much not an attempt to avoid, more so just to have better control of multiple streams of income and the when of the tax payment.