What is Family Trust Australia? Importance of Family Trust

Family Trust Australia
Australian family trust is the optional trust, set up to conduct a family business or hold a family’s assets. Family trust in Australia helps in tax purposes or asset protection. A discretionary trust is one of the most common small business structures in Australia. Here in this article, you will learn more about the Australian family trust and its importance.

Discretionary trusts in Australia- Family Trust Australia

The family trust in Australia is accepted by the family member for the advantage of the members of the family group. Australian family trust is the subject of a family trust election that will certainly provide tax advantages, provided that the discretionary passes the family control test and provides distributions of the trustee income only to the members who are inside the family group. Australian family trust assists in protecting the group assets of the family from the liabilities of 1 or more family members. The trust also provides the mechanism to pass on the family’s assets to future generations. It can also provide accessing complimentary taxation treatment to ensure all family members are using their “tax-free thresholds.” Know about a few important roles in the Australian Family Trust:

●       Trust Deed

The terms and conditions under which the Australian family trust is created and maintained are provided in this deed. The trustee (or trustees) and the trust’s settlors establish the trust by signing the trust deed. The settlors also give the trust property to the trustee.

●       The Settlor

The function of the settlor is to give the assets to the trustee. It is for the purpose of holding the interest of the beneficiaries of the trust on the specified terms and conditions set out in the deed. The settlor can execute the trust deed and eventually has no further involvement with the trust.

●       The Trustee

The trustee is completely responsible for the assets and the trust and enjoys broad powers to manage the assets and conduct the trust.

Importance Of Australian Family Trust

The importance of the Australian Family Trust are:

●       Protecting the Assets

Australian family trust helps in asset protection. It means that a member of the family can buy a house for a child to live in. But he or she will not have the ownership being forfeited. The ownership always remains with the trust.

●       Minimize Tax

Australian family trusts help in trust distribution. It shows lower incomes for tax purposes.

●       Plan Properly for Retirement Savings

The trust will have a flexible structure, providing an opportunity to collect wealth that can add to superannuation savings.

●       Flexibility in Investing

Holding assets in the trust do not have the same strict rules, just like super assets.

●       CGT or Capital Gains Tax

Unlike Companies, family trusts enjoy Capital Gains Tax. This means that a family making an investment can enjoy 50% CGT with the trust structure.

The Bottom Line

Australian family trust is a very complex area. There are very few chances of reformation in the family trust structure of Australia. While Australian family trust provides several benefits, it might still have a few complicated areas. It is best for the trustees to consult the trust deed and seek professional advice from experts like Compex to discharge the responsibilities of the trustees. 

Location: Frankston South VIC 3199, Australia

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