Discretionary Trust - bucket company
Set up a bucket company structure for your existing discretionary trust as part of your overall financial strategy.
($418.00 Cleardocs fee inc. GST and $488.00 ASIC company registration fee)BUY THE PRODUCT
Use Cleardocs to register a bucket company structure for your existing discretionary trust and create all the documents you need to give effect to tax advantageous trust distributions.
Cleardocs will guide you through these steps:
- confirm that you have an existing discretionary trust — if you have a Cleardocs deed we can use answers from the earlier order to "pre-populate" your new document;
- set up your new discretionary trust — to receive distributions from the bucket company by way of dividends;
- receive the income distribution minutes template for your new discretionary trust;
- submit the ABN application for the new discretionary trust;
- register your bucket company;
- create a Division 7A loan agreement to record a loan from the bucket company to the existing trust: This covers any distributions declared by the existing trust but not paid (i.e. unpaid present entitlements); and
- create a second Division 7A loan agreement to allow the bucket company to lend monies it received from the existing trust to the beneficiaries of the new discretionary trust.
Before using this product, you will need to ensure that the newly registered company will be an eligible beneficiary of your existing discretionary trust by checking the trust deed — see related FALQ.
Time taken to complete 30 minutes
Cost $ 906.00 (inc GST) — Cleardocs fee $418.00 and the ASIC fee $488.00
Printing Optional printing, binding and delivery
Legal Sign-offThe master documents are written in plain language and are signed-off by our lawyers at Maddocks.
What documents are included in the Cleardocs package?
The Cleardocs package includes:
- electronic bucket company registration and company set up documents;
- new discretionary trust set up;
- ABN registration for the new discretionary trust;
- income distribution minutes template for your new discretionary trust;
- two Division 7A loan agreements; and
- an Establishment Kit explaining what to do next.
What is a "bucket company"?
A bucket company is a company that is set up as a beneficiary of an existing discretionary trust that allows a trustee to distribute trust income to it. The shareholder(s) — as trustee(s) of a newly established trust — of the bucket company is then paid dividends in the future and then distributes this income to its beneficiaries.
Why would I use the Bucket Company document package?
The document package will establish a bucket company which will become a beneficiary of a customer's existing discretionary (family) trust. The purpose is to enable distributions to the bucket company where eligible (and preferred) beneficiaries of the trust have already used up their tax rate of 32.5%: by distributing remaining income to the bucket company — this income will be taxed at the corporate rate (currently 30%).
The income will then remain in the bucket company until the bucket company decides to distribute the income to its shareholder(s) (being the trustee of a separate discretionary trust with the same or similar named beneficiaries) by way of franked dividends. This ensures the beneficiaries will not be required to pay tax on the proportion of the dividend on which the company has already paid tax. Ideally, these distributions are made at a later time when the beneficiaries' marginal tax rates are at or below 30%.
Do I need an established trust?
Yes, the operation of the document package assumes that you already have a discretionary trust in place. The bucket company then becomes an eligible beneficiary of that existing discretionary trust. If you do not have a discretionary trust in place, you must first create a discretionary trust.
Cleardocs deed not required for established trust
You can use this product even if your existing discretionary trust does not have a Cleardocs deed. You will need to check the terms of your trust deed to ensure that when the bucket company is registered it will fall within the general class of beneficiaries of your discretionary trust.
Seek legal advice
The Discretionary Trust — bucket company information here should be considered general in nature, and in no way interpreted as legal advice. You must always seek your own independent legal, accounting and financial advice about your particular situation. The summary on this page is for information purposes only.
Questions or further information
If you have questions:
- about how to use Cleardocs, contact the Cleardocs helpline on 1300 307 343.
- about legal issues, contact the Cleardocs helpline on 1300 307 343. If you need advice, we will arrange for you to speak with a lawyer at Maddocks. The firm provides a free legal helpline in relation to the documents Cleardocs provides. If you require other legal advice in relation to your particular circumstances, then this will be charged for.
- Effective year end tax planning solution
- Our trust deed is Bamford case compliant
- Extensive online help and local phone support
- Lodgement of your bucket company registration application with ASIC 24/7 using our electronic lodgement portal
- Full range of tailored company and discretionary trust set up documents
- Simple process for ABN, TFN & GST applications
- Easy to use question interface
- Copy function for address details