Company vs Trust Structure EXPLAINED SIMPLY (Australia)

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In this video, we compare the pros and cons of a Company Structure and Trust Structure, including some real-world case studies, so that you can make an informed decision on the best structure for your business.

Watch until the end to learn about how we use a Hybrid Structure to help our clients manage their taxes more effectively.

CHAPTERS:
00:00 - Intro
01:14 - Overview of Company Structure
01:39 - Advantages of a Company Structure
02:33 - Disadvantages of a Company Structure
03:05 - Case Study 1: Choosing Sole Trader Over Company
04:21 - Overview of a Trust Structure
06:33 - Advantages of a Trust Structure
07:50 - Disadvantages of a Trust Structure
08:22 - Case Study 2: Choosing Company Over Sole Trader
08:50 - Case Study 3: Choosing Trust Over Company
09:25 - Case Study 4: Hybrid Structure
11:30 - Final Thoughts

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Thank you for watching this video. I post videos on this channel to provide the latest and most frequently asked business questions. Please take a second to say hi in the comments below. Also, if you enjoy the video and find it valuable, subscribe to the channel, like and share it with anyone who you think might find my channel useful!

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Davie has over 15 years experience in advising businesses in management accounting and taxation issues. He heads up a passionate team at Box Advisory Group who are dedicated to offering proactive and outstanding service to our clients.

Davie’s extensive experience in providing tax and consulting advice and astute business knowledge has paved the way for success for many businesses.

He is a member of the Chartered Accountants Australian and New Zealand, a member of the Australian Tax Practitioners Board and holds a Bachelor of Commerce degree from the University of New South Wales.

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Disclaimer:
This video is for informational purposes only and should not be considered financial or legal advice. This video does not take into consideration your personal circumstances. Consult with a qualified financial planner, tax advisor or legal consultant before making any decisions regarding investments.

[ronlucock]

Hey mate, great video. I started as a trainee accountant for a swanky firm with swanky clients when I was 20 years old in 1988. It was a golden era. And yes, we had lots of high-income clients who were distributing income to 6-month old babies. But one technical check: You said that back then you could give $18, 000 to a child under 18. I assume you said $18k because that's roughly the Tax-Free Threshhold NOW. Back in 1988 it was $5, 400. So whilst we were encouraging clients to distribute their income, we were also encouring them to have more kids. They could literally be a day old on 30 June. They didn't even need TFN's. But we could only give them $5400. But anyway, that's history. Your guidelines for the here & now were spot-on. Liked & subscribed. 😃

[huzlfinance]

This is brilliant Davie. So well explained. Big fan of your offerings.

[silverBullAU]

great videos you put out, straight to the point detail

[Riccardo_]

Another great vid 🎉 thanks for taking the time Davie!

[geoffreystone]

Could you do a video to bring this clarity to a self managed superannuation fund?

[neilhay]

thank you, very helpful and informative.

[JoshFrancis-di]

Mate that was very good and informative

[davianoinglesias]

This is why I pay for WI-FI, new subscriber

[jalihumunguy]

Well made video, good presentation. Subscribed

[MrBruster]

Well done, best explanation.. not even my accountant could do this 😂

[Nerdificationing]

How do you move a property into a trust - do you have to repay stamp dury?

[emmama]

Hi Davie, my question is 8:22 disadvantage of a trust- NO CGT discount? I think this is 50% discount if hold the asset more than 12 months. correct me if needed.

[terrysmith]

Thanks David. Ive been the sole Director of a shelf company (construction) for 30 years. As a working director, if i formed a trust, does the Trust have to pay workers comp payments.

[yiannimav]

You mentioned trusts get CGT discount but at 08:20 you said that they don’t. Which is it?
Also, what’s the deal with negative gearing, can you benefit from it in a trust?
Do banks only lend to a trust if it’s positively geared (ie meeting its obligations)?

[chrisdavey]

Great video mate. Nice and easy to understand for non accountants.

You need to up your fees though 😂

I quite often recommend the hybrid structure also but sometimes with a holdco between opco and holding trust. Mainly so that the retained earnings can be paid in franked divs to opco to be used for other investment purposes without the requirement to distribute taxes somewhere (like bucket company to minimise div 7a BS 😂)

[lcmr]

If I transfer my crypto to a cook islands trust I'm told Im up for tax, but once I've payed that tax and the crypto that is in the trust goes up in value..? Im guessing yes. What if I moved out of Australia (after value goes up) to a no tax country (llike Dubai), would I have to pay tax on the crypto valuation rise? Thank you for your time.

[davhong]

Great content, I have a question based on the hybrid diagram - would an individual pay tax twice? Firstly via the business and secondly when the dividends are distributed as income?

[thafrost]

Can you do some videos or more videos on how to pay less tax with loop holes or grey areas that millionaires and billionaires in Australia use,

And examples with drawings or graphs that explain it

Like when people get in the 10m-10b kinda money range and how to reduce it or pay no tax or as minimal as possible

Especially if you have assets like crypto or anything that has capital gains basically that you can reduce beside the 50% 12 month hold discount other ways to reduce would be interesting to see how the elites and top guys do it

[Rolls]

Wouldn't your example on hybrid structure be better to pay tax inside company at 25% as. Opposed to going through the trust since the beneficiary rates are higher??

[rob-neill-aus]

Now what if yur revenue in the company is all PSI - personal services income - ATO requires company profits to be reduced by declaring Directors fees (taxed at personal tax rate) to stop leaving a big profit int he company and paying the lower company tax rate... Is a discretionary trust therefore beneficial for this type of revenue (PSI revenue).?