7 - Tax planning - Tax planning Learning objectives...

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Tax planning Learning objectives Understand how the taxation is different for different entities (e.g. individual, company, partnership etc.) Understand fringe benefit tax rule Understand bankruptcy rule Know how to do questions on FBT & dividend imputation Make sure you understand WHAT the tax entity is and WHO the involved individuals are Entity Income tax rate for the entity How is it taxed on individuals? Personal entity Varies Individuals are taxed at their personal tax rate Company 30% Taxed individuals are shareholders. They are taxed by their marginal tax rate but they are compensated by the ways of franked credits. Partnership - Treated as jointly owned assets - Loss is distributed to the partners to reduce their TAXABLE income Does not pay tax (but need to file tax returns) Taxed individuals are partners. Taxed at their own marginal tax rate. Trust - Three main partners are settler, No tax if all the distributions are paid out to beneficiaries Taxed individuals are beneficiaries. Taxed at their own marginal tax rate.
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beneficiaries, trustee - 3 main types of trust: Discretionary, testamentary and superannuation fund trust - How is loss treated? Loss flows to next financial year until it is offset against future trust income. Superannuation - Special type of trust - Distribution is not made until the retirement age is met (or if other special criteria apply) 15% on income 15% upfront tax on contribution & 10% tax on capital gain Fringe benefit tax (What is fringe benefit?) Prior to the introduction of FBT: Fringe benefits are usually provided as part of the salary packaging arrangement.
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