logochartered-accountants-Aucklandchartered-accountants-Auckland

Chartered Accountants

Trusted advisers of all tax compliance and annual accounting issues facing both individuals and small businesses.

Charitable Trusts

What is a charitable trust?

A charitable trust is specifically set up to hold and protect assets for charitable purposes

It can be set up to aid in the relief of poverty, the advancement of education or religion, or any other matter for the public benefit

How does it work?

Trustees are appointed to administer the charitable trust, and ensure the assets are invested to provide lasting benefits and your (you being the Settlor) intentions are carried out long after you’re gone, or before your’e gone

You can decide the purpose to benefit and how; and you can donate as much as you want and will receive a tax credit up to a maximum of 1/3rd of your income

Case Study

Mrs A is nearing 90 yo, has no dependants, her Estate is valued at $10M, of which $5M is effectively in cash assets.

Apart from some specific legacies to friends, her Will leaves the bulk of her estate to charity.

I am her executor.  Her Will is a very short document leaving me very little guidance on her death.

What did we do……..

  1. with the assistance of a lawyer we established a Charitable Trust which was registered with the Charities Commission
  2. in year 1 Mrs A donated $500,000 and received a donation tax credit of $165,000, her income was very high this year due to the winding up of her business
  3. in each subsequent year the intention is that she donates up to the level of her income, normally about $50,000 per annum
  4. in some years a donation may not be made if the annual sustainable spending analysis indicates her cash and investments may not outlive her
  5. during her lifetime the charitable trust makes annual distributions to a wide variety of charitable causes that would not otherwise benefit until after Mrs A’s gone
  6. the fulfilment Mrs A gets from presenting annual distributions is immeasurable
  7. and she gets 1/3rd back each year in donation tax credits which would not be available after she has gone

 

 

 

 

 

We have been with BDS Hughes Accountants nearly 5 years. Without their knowledge and forthright suggestions we would not been able to experience our high level of success. We are comfortable with the working relationship and ease with which they are able to communicate with us. As we as the normal accountancy service, Garry advised us on Xero accounting and taught us to uses the program in plain simple English. We can say only that we have had nothing but exceptional service and the advise we have received has been correct and perfect for our business, which is why i would not hesitate to recommend their services.
Wendy EvansDirectorThe Roof & Brick Shoppe

Latest news

Secrets to a savvy SMSF

Posted on January 17, 2018 by BDS Hughes

Opting for a self-managed super fund (SMSF) can be a clever financial decision, but it’s not for everyone. If you aren’t prepared to adhere to the following tips, your SMSF will most likely fail to perform as well as you would of hoped it to. Stay informed You can’t expect your SMSF balance to be the most profitable for you in your retirement phase if you don’t remain educated on the vastly changing compliance laws. Remaining up-to-date with these changes, and how they impact upon your nest egg is an essential aspect of making your SMSF work for you, your […]

send us a message or a question

  • This field is for validation purposes and should be left unchanged.

Upper Level, Watchdog House
21 Tamariki Ave, Orewa, Auckland

P: 09 426 2999 | F: 09 426 0812 | M: 021 790765
E: GARRY@BDSHUGHES.CO.NZ