All Topics / Help Needed! / Streaming income for Tax reasons

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of CRCR
    Participant
    @christoo
    Join Date: 2017
    Post Count: 2

    Hello all,

    Let’s say I was inheriting a property and as a beneficiary it was coming to me me with a lease and a significant amount of rental income.
    I already have a great job and this income is going to be taxed heavily, where my Spouse is not working.
    Moving the asset to a trust is not really an option due to the triggering of CGT and Stamp Duty.

    Is it possible to create a property management pty ltd company that leases the property from me for $1?
    Then I can use that company to lease the property to the tenants and distribute the income via dividends through an existing DT that would own the company shares?

    Cheers and thank you for your input.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Short answer is ‘no’, Well you could do it, but no tax advantage.

    But you should seek legal advice asap as there may be some strategies available before the estate is finalised – avoid CGT and stamp duty possibly.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of CRCR
    Participant
    @christoo
    Join Date: 2017
    Post Count: 2

    Thank you Terry for your reply.

    To understand a little clearer, you said “Short answer is ‘no’, Well you could do it, but no tax advantage.”
    Do you mean that you can do it as long as there is no tax advantage, or you can do it but there is no tax advantage?

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Thank you Terry for your reply.
    To understand a little clearer, you said “Short answer is ‘no’, Well you could do it, but no tax advantage.”Do you mean that you can do it as long as there is no tax advantage, or you can do it but there is no tax advantage?

    You can do it if you like, however the ATO isn’t silly and can see when things are a scheme primarily setup to reduce tax and will then deny the tax deductions for it.

    This usually gets brought up when people come up with ideas to try reduce their tax with these kinds of setups: https://www.ato.gov.au/General/Gen/Part-IVA–the-general-anti-avoidance-rule-for-income-tax/

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Thank you Terry for your reply.
    To understand a little clearer, you said “Short answer is ‘no’, Well you could do it, but no tax advantage.”Do you mean that you can do it as long as there is no tax advantage, or you can do it but there is no tax advantage?

    You can borrow to do as you propose but the interest won’t be deductible.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Thank you Terry for your reply.To understand a little clearer, you said “Short answer is ‘no’, Well you could do it, but no tax advantage.”Do you mean that you can do it as long as there is no tax advantage, or you can do it but there is no tax advantage?

    You can do it if you like, however the ATO isn’t silly and can see when things are a scheme primarily setup to reduce tax and will then deny the tax deductions for it.
    This usually gets brought up when people come up with ideas to try reduce their tax with these kinds of setups: https://www.ato.gov.au/General/Gen/Part-IVA–the-general-anti-avoidance-rule-for-income-tax/

    Hi Corey

    Actually with something like this Part IVA wouldn’t be applied because it would fail deductibility under s 8-1 ITAA97.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Thank you Terry for your reply.To understand a little clearer, you said “Short answer is ‘no’, Well you could do it, but no tax advantage.”Do you mean that you can do it as long as there is no tax advantage, or you can do it but there is no tax advantage?

    You can do it if you like, however the ATO isn’t silly and can see when things are a scheme primarily setup to reduce tax and will then deny the tax deductions for it.This usually gets brought up when people come up with ideas to try reduce their tax with these kinds of setups: https://www.ato.gov.au/General/Gen/Part-IVA–the-general-anti-avoidance-rule-for-income-tax/

    Hi Corey
    Actually with something like this Part IVA wouldn’t be applied because it would fail deductibility under s 8-1 ITAA97.

    Good pick up – you’re right there. :)

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

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