Investment companies a better alternative to family trusts

michael hutton HLB Mann Judd superannuation franking credits retirement income

24 June 2021
| By Chris Dastoor |
image
image
expand image

Investment companies present an alternative for family trusts, when it comes to planning alongside superannuation for high net worth clients, according to HLB Mann Judd.

Michael Hutton, HLB Mann Judd partner, said investment companies could be used to house and invest family wealth.

“One of the things we’re talking to our wealthier clients about is using it as an alternative structure in addition to superannuation,” Hutton said.

“The benefit there is you’re not limited by contribution limits, a family can loan money into the company and then have that company invest money from them and earn income on those investments.

“It’s taxed at the company rate of 30%, rather than perhaps the top marginal tax rate if they were to invest that money in their own name.

“That’s not as good as superannuation, which is why it should be part of the strategy and perhaps the major part of the strategy.”

For that reason, Hutton said investment companies had come into play more often with discussions with wealthier clients.

“Where they’re not able to draw enough from their super because they didn’t build it up enough, they can draw down on the investment portfolio and effectively they’re drawing down on a loan account so there’s no tax payable,” Hutton said.

“They can pay dividends out of that to themselves as these would come out as franked dividends.

“It doesn’t have to declare a dividend each year, it doesn’t have to pay out profits, which is different to a family trust, so were finding that to be a flexible way to go.

“It’s also perpetual and can continue on past the death of the shareholders, whereas a super fund cannot.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

2 days 7 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

6 days 13 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 4 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 6 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

5 days 11 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

4 days 14 hours ago