WARNING - A Trust is far Superior to a Company

In most situations a Trust is far superior to a Company for running your business under - no matter what your Accountant says. If your professional adviser tells you otherwise he or she is wrong.

A trust is simply an obligation binding a person (known as the Trustee) to deal with property over which he or she has control (the Trust property) on the terms on which he or she was given it for the benefit of the beneficiaries.

The requirements of a Valid Trust are that there must be property capable of being the subject for of the Trust; and a Trustee who has control of the Trust property and who is under a clearly defined obligation to deal with it for the benefit of beneficiaries.

There is considerable tax saving with a trust. If the trustee chooses to distribute some or all of the trust income to the beneficiaries this is taxed at the beneficiaries own tax rate. The main tax advantage of the trust is that it allows tax to be saved by splitting income off to individuals who pay lower rates of tax, than the original recipients.

In NZ, the proper and legal use of trust arrangements still remains one of the best avenues for minimising a taxpayer’s tax.