Hi,
I have a corporate structure for my companies. The structure is as followed.
I have a family trust which holds/owns the shares of an umbrella company. (Call it company A). Company A does not trade but only receives income from franked dividends from company B & C to which it owns both of.
Company B is an investment and property holding company, Company C is my day to day trading company.
I use franked dividends to move funds from company C to company B through company A after each financial year, with company A lending the funds to company B after it receives the dividends. This is for servicing loans and investing the money.
My accountant has suggested Company B charging company C for management fees of Company A, which helps avoid losing the extra 5% as a full franked credit. My question is what are the limitations, guidelines around this, as I understand that it would still result in the same gst and tax being paid from company B & C, but it avoids the extra 5% tax for the full franked credit in the meantime. What needs to be set up, is it legal? I just wanted to get some clarification around it. Not that I don’t trust my accountant, I don’t want to raise red flags for an audit
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