A Child Maintenance Trust is a way for separated parents to pay less tax and satisfy their child maintenance obligations at the same time. Basically, you place income producing assets into the trust. The income generated in your trust is used to pay your child maintenance obligations. The overall effect of the trust is to reduce the amount of money you need to earn to pay your child support obligations. That is, you will be paying less than if you were paying child support directly to the custodial parent.You will be even more interested to know that in some cases no tax would be payable.
How does it Work?
It works like this. Instead of the income being taxed in the hands of the paying parent it is taxed in the hands of the child. Due to a concession from the government, the child is entitled to claim the $6,000 tax free threshold. So you get a $6,000 tax free concession per child.
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(article sourced from www.lawcentral.com.au)
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