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What Changes As A Small Biz Owner Once My Kid Turns 18

What Changes As A Small Biz Owner Once My Kid Turns 18

Are you a parent with a kid graduating and going to Schoolies this year?

I’ve got some good news for you… No, I can’t promise you they’ll be safe and sound. But I can give you some pleasing financial info. While your kid is gallivanting around, we can work out how to use those kids to our benefit in your business.

This is for those out there who have a growing small business in a trading trust.

So, your kid has either just turned 18 or is turning 18 soon. That signals happy days, from a tax viewpoint.

If you’re running your business through that trading trust and you’re making profit at the end of the year, you’ll obviously distribute that profit via a minute just before the end of the financial year.

And when your kid turns 18, finally they can start working for you without even lifting a finger.

Before the end of the year, kids over 18 can go from only earning $416 as a distribution from the trust, and they can start to get $18,200 tax free coming out of the trust. Then the next 18,800 is taxed at 19%.

That’s a beautiful set of numbers that can start to be used for your advantage in a growing small business. You can start to distribute to your kids and see a major tax saving.

To recap:

  • Up to $18,200 distributed to your 18 year old, TAX FREE
  • $18,800 distributed to your 18 year old, taxed at 19%

It’s all legal so you should follow it.

Call the Tax Champions on (03) 8393 1000 to find out more information.

And keep your heart in your mouths, because those kids at Schoolies really do gallivant around.

 

Pat Mannix, Partner, Paris Financial