Family trusts v Companies, OpenAI's Astra & bonds are back

Not a huge amount.

A couple of flip-flops with the budget changes.

We've seen a couple of announcements come out post the May budget and the biggest one being on Thursday last week, Jim Chalmers has come out with another change to...

the way distributions come out of a discretionary trust.

So as a recap of what came out of the budget, it was essentially this minimum 30% tax that was going to apply to all discretionary trusts.

And they've now come out and Realised there may be a few issues with that.

State legislation covers trusts and there was going to be some stamp duty that might apply to anyone that was trying to utilise the rollover relief from a trust to a company.

Some people were significantly more affected than others.

So essentially what he's come out and said last week is that If you can predefine who you are going to distribute to, you can avoid that minimum tax.

That kind of takes out the discretionary aspect of the trust to begin with, but it's a fairly major flip from what the budget originally announced.

So we'll get into trust-free companies and these types of things in a minute because you deal with a lot of our clients that have that kind of question, but also it's just really good groundwork for a lot of people that maybe aren't keeping up with the budget changes or even what the heck a family trust would be used for nowadays.

But are you saying that The original plan was that the family trust would be taxed a minimum of 30% at the trust level and then send the money down to whoever receives the money or if it's a bucket company.

We'll get to that in a little bit.

That was going to be 30% regardless, right? Are you saying now that the rule is effectively, could be Ts and Cs, if you predefine who that money is going to go to, that 30% doesn't apply? They're just taxed as they were before? at the recipient level.

Is that right?

That's right.

So essentially when they made that announcement back in May, it effectively ruled out bucket companies altogether because there was going to be this double taxation when distributions pass through to a corporate beneficiary.

Importantly, this change means that maybe bucket companies aren't dead in the water.

The AFR has written an article, Chalmers' Trust Changes Preserve the Bucket Company.

Now, James is not a planted guest today, but I do have said bucket company and also family trust.

So this is free wisdom for myself.

We'll dig into this in a bit more detail when we come to talk about, in just a moment, the difference between trusts and companies for investors and that sort of thing.

Not a huge amount.

A couple of flip-flops with the budget changes.

We've seen a couple of announcements come out post the May budget and the biggest one being on Thursday last week, Jim Chalmers has come out with another change to...

the way distributions come out of a discretionary trust.

So as a recap of what came out of the budget, it was essentially this minimum 30% tax that was going to apply to all discretionary trusts.

And they've now come out and Realised there may be a few issues with that.

State legislation covers trusts and there was going to be some stamp duty that might apply to anyone that was trying to utilise the rollover relief from a trust to a company.

Some people were significantly more affected than others.

So essentially what he's come out and said last week is that If you can predefine who you are going to distribute to, you can avoid that minimum tax.

That kind of takes out the discretionary aspect of the trust to begin with, but it's a fairly major flip from what the budget originally announced.

So we'll get into trust-free companies and these types of things in a minute because you deal with a lot of our clients that have that kind of question, but also it's just really good groundwork for a lot of people that maybe aren't keeping up with the budget changes or even what the heck a family trust would be used for nowadays.

But are you saying that The original plan was that the family trust would be taxed a minimum of 30% at the trust level and then send the money down to whoever receives the money or if it's a bucket company.

We'll get to that in a little bit.

That was going to be 30% regardless, right? Are you saying now that the rule is effectively, could be Ts and Cs, if you predefine who that money is going to go to, that 30% doesn't apply? They're just taxed as they were before? at the recipient level.

Is that right?

That's right.

So essentially when they made that announcement back in May, it effectively ruled out bucket companies altogether because there was going to be this double taxation when distributions pass through to a corporate beneficiary.

Importantly, this change means that maybe bucket companies aren't dead in the water.

The AFR has written an article, Chalmers' Trust Changes Preserve the Bucket Company.

Now, James is not a planted guest today, but I do have said bucket company and also family trust.

So this is free wisdom for myself.

We'll dig into this in a bit more detail when we come to talk about, in just a moment, the difference between trusts and companies for investors and that sort of thing.