One of the questions we frequently get asked during tax planning is, “What’s the best tax planning strategy?” The truth is, there is no one-size-fits-all answer. That’s why it’s crucial to talk to your accountant and get the strategy that is best for your unique needs, entity, and setup.
However, for those with a trust, having a trust with a valid trust distribution minute is hands down the best strategy. A simple minute that specifies where the profits will be distributed at the end of the year can have significant tax implications.
The Power of a Trust Distribution Minute
By signing a trust distribution minute, you have the ability to potentially pay no tax, 19% tax, 32.5% tax, or even 25% in a bucket company, instead of having it taxed in your trust at 46%.
One little document that allocates those profits can save you significantly on your tax rates.
Why It’s Important
For anyone with a trust, signing a trust distribution minute is a critical strategy. It provides the flexibility to allocate profits in the most tax-efficient manner possible. This simple action can make a huge difference in the amount of tax you pay.
Conclusion
There is no single “best” tax planning strategy—the best strategy is the one tailored to your specific situation. However, if you have a trust, signing a trust distribution minute is an essential step to ensure you are minimising your tax liability effectively.
Consult with your accountant to explore this and other strategies to optimise your tax planning and achieve the best possible outcomes for your financial situation.