How the Rich Structure Their Finances Ft. Amanda Quill

When it comes to managing money smarter, many clients are curious about how the wealthy seem to pay less tax, protect their assets more effectively, and leverage legal entities in ways that everyday New Zealanders often overlook. Amanda brings expert insight into how the rich structure their finances using tools like companies, trusts, and smart ownership splits—all within the boundaries of the law.

From offshore temptations to trust tax rates, we explored what works (and what doesn’t) when structuring wealth. If you’ve ever considered forming a company for property investment, using a trust to distribute income, or wondered if offshore entities are worth the hype—this one’s for you.

Wealthy people don’t necessarily avoid paying tax—they just understand how to legally reduce it using different ownership structures. Amanda breaks down the main options available in New Zealand:

• Individual and Partnerships: Often used by sole traders or first-time investors. Simple and inexpensive, but subject to marginal tax rates.

• Companies: Taxed at 28%, which can be appealing for those in higher tax brackets. However, any funds withdrawn for personal use are still subject to personal tax rates.

• Look-Through Companies (LTCs): These flow profits and losses directly through to shareholders. Useful for allocating income strategically.

• Trusts: Offering flexibility in income distribution and some legal protection, trusts have gained popularity among wealthier individuals—though they require careful management.

While a company structure might look attractive for its 28% tax rate, Amanda warns that retained earnings don’t become personal assets unless declared. That’s a common trap many fall into—mistaking the company’s income as their own.

One of the most common myths Amanda hears is that shifting business profits to offshore companies—say, in the Bahamas or Ireland—can help dodge New Zealand tax. But for the average Kiwi business owner, this is both unwise and ineffective. “You’re going to have to pay some tax at some point,” Amanda says. Plus, IRD has ramped up its auditing and now uses advanced tech to sniff out dodgy structures faster than ever.

There’s also a growing trend of trusts being seen as “sham” entities when poorly managed. If a trust is found to be a tax dodge, the IRD can unwind the structure and treat the income as personal—undoing years of perceived savings.

Amanda also highlights the risks of using family members as trustees, especially when they’re also named beneficiaries. This setup may trigger complications with lenders, who treat non-professional trustees with caution.

Asset protection and tax efficiency don’t always align. While a lawyer may advise on safeguarding wealth during divorce or business disputes, the accountant’s role is to ensure tax efficiency. Amanda stresses the importance of both perspectives—especially when big life changes are involved.

An effective structure isn’t just about saving money on tax. It also needs to reflect your personal circumstances, future plans, and potential legal exposure. Sometimes, the simplest option is the best one—especially when the admin and compliance costs of a more complex structure outweigh the tax benefits.

• Know your structures: Companies, LTCs, trusts, and partnerships all serve different purposes. Choose based on your goals—not just your tax rate.

• Trusts offer flexibility—but only if well managed: Misuse or poor documentation can lead to IRD scrutiny or legal issues.

• Avoid offshore schemes: They rarely work for ordinary Kiwis and often create more risk than reward.

• Structure matters for income splitting: Whether investing as a couple or family, the right setup can significantly improve tax outcomes.

• Don’t forget the admin: Complex structures come with higher costs, more reporting, and greater risk if mishandled.

• Seek expert help early: If you suspect you’ve made a mistake, voluntary disclosure is your best option to avoid harsh penalties.

If you’re not 100% sure your current financial structure is working in your favour, Lighthouse Financial can help. Whether it’s a trust, look-through company, or company setup, our team will make sure everything aligns with your long-term goals. Book a free chat with our team here.

If you’d like to learn more, check out these other episodes below.