Home » 30 simple ways to reduce your tax bill » 5. Hold investments in a discretionary family trust

5. Hold investments in a discretionary family trust

A discretionary family trust can be beneficial for high income earners who are seeking to redistribute some of their income to family members on lower tax brackets.

A properly drafted discretionary trust allows trustees to make distributions to the most appropriate members regarding their tax status i.e. distribute more income to beneficiaries on lower tax brackets or those with no other income to utilise the $18,200 tax-free threshold.

Any capital gains that are made can be distributed to beneficiaries with capital losses available or who can use of the 50 per cent discount.

Franked dividends may also be paid to beneficiaries who can use the imputation credits to reduce tax on other income.

Trusts can also use the 50 per cent discount on CGT on the sale of an asset if it was held for more than 12 months.

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