{"id":9521,"date":"2024-03-15T12:15:05","date_gmt":"2024-03-14T23:15:05","guid":{"rendered":"https:\/\/mccallum-dallas.co.nz\/?p=9521"},"modified":"2024-03-25T10:42:16","modified_gmt":"2024-03-24T21:42:16","slug":"tax-increase-considerations-for-companies-owned-by-trusts","status":"publish","type":"post","link":"https:\/\/mccallum-dallas.co.nz\/tax-increase-considerations-for-companies-owned-by-trusts\/","title":{"rendered":"Tax Increase Considerations for Companies owned by Trusts"},"content":{"rendered":"

The income tax<\/span>\u00a0rate for\u00a0Trust<\/span>s is moving to 39% (from 33%) from 1st<\/sup> of April 2024, a significant increase for trusts.<\/p>\n

What if my Trust owns my Company?\u00a0<\/strong><\/p>\n

If you have a company with shares owned by your Trust<\/span> we are encouraging you to review your position and carry out an analysis of whether a dividend should be declared to the Trust this year before the tax rate changes.\u00a0<\/span><\/p>\n

Why should you be thinking about this?<\/b><\/p>\n

In basic terms, if you don\u2019t, then when you need to distribute money out of the company to your\u00a0Trust<\/span>, the\u00a0Trust<\/span>\u00a0will have to pay a 39%\u00a0tax<\/span>\u00a0on it which will be an additional 6% of\u00a0tax<\/span>\u00a0if this is done\u00a0after<\/i>\u00a01st<\/sup>\u00a0April 2024. As an example, let\u2019s say your company needs to pass on $100,000 of retained earnings to your\u00a0Trust<\/span>. To do this, your company will need to pay a dividend as calculated below. As you can see, if this is done after 1st<\/sup>\u00a0of April 2024, there will be an additional $8,955 of\u00a0tax<\/span>\u00a0to pay to IRD on this when compared with doing this prior to 1st<\/sup>\u00a0April 2024.<\/p>\n

\"\"<\/p>\n

But I don\u2019t need to take any money out of my company so it doesn\u2019t affect me right?<\/i><\/b><\/p>\n

This may be true\u00a0at this point in time<\/i><\/b>. However looking longer term, let\u2019s say you sell your business or wind it up. To close down your company you need to distribute your retained earnings to the shareholders which means doing a dividend. At this point, you will need to do the above and if you haven\u2019t taken advantage of the 33%\u00a0tax<\/span>\u00a0rate when it was available, any retained earnings prior to 1st<\/sup>\u00a0April 2024 will incur the 39%\u00a0tax<\/span>\u00a0rate when it could have been\u00a0tax<\/span>ed at 33%.<\/p>\n

How Can We Help?<\/i><\/b><\/p>\n

We can carry out a review of your company and\u00a0Trust<\/span> to identify whether we recommend declaring a dividend. Get in touch with us to discuss.<\/p>\n

reception@mccd.co.nz<\/p>\n","protected":false},"excerpt":{"rendered":"

The income tax\u00a0rate for\u00a0Trusts is moving to 39% (from 33%) from 1st of April 2024, a significant increase for trusts. What if my Trust owns my Company?\u00a0 If you have …<\/p>\n

Read More… from Tax Increase Considerations for Companies owned by Trusts<\/span><\/a><\/p>\n","protected":false},"author":11,"featured_media":9526,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[88,83,86],"tags":[],"jetpack_publicize_connections":[],"acf":[],"yoast_head":"\nTax Increase Considerations for Companies owned by Trusts - McCallum & Dallas Limited<\/title>\n<meta name=\"description\" content=\"The income tax\u00a0rate for\u00a0Trusts is moving to 39% (from 33%) from 1st of April 2024, a significant increase for trusts. 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