Originally posted by surfermark:
the dividends are CGT free under LAQC structure
Dividends are normally treated as income, not capital gain. Are you sure that’s not the case in a NZ LAQC as well?

Secondly I am trying to figure out if I can retain the profits within the company in NZ and use them to re-invest in other properties etc. (probably…[Read more]

Profiteer,

losses incurred by property owned by the trust could not be offset against our personal income but can be offset against any future income made by the trust
Yes, but there are issues with trust losses. To carry forward trust losses the trust has to make a family trust election, which has certain consequences in relation to who the…[Read more]

Chris,

Originally posted by masteraccountants:
The trust transferor rules only apply where property is transferred into the Trust for less than its market value.
Here’s the exact wording of that part of the transferor trust provisions:

You will be regarded as a transferor if you:

• have at any time transferred property or services to a non…[Read more]

Originally posted by shar30441:
He put me onto another accountant who specialises in overseas income.
Yeah, me too.

However,he did mention that in some circumstances now you can negative gear overseas. Something to do with some tax changes from 2001 but alot of accountants don’t know about it!
Yes. See ID2002/764 in the ATO legal database. I…[Read more]

Originally posted by shar30441:
it would be CGT on our returns, however, it would be taxed at the same rate as any rental income we received would be taxed at ie whatever our income rate is
If it’s CGT then hopefully you should be able to get the 50% discount if the property has been held for more than 12 months.

Did the ATO mention his, or…[Read more]

Originally posted by aptam:
I have heard of LAQC a few times on the forums – what does it actually stand for ?
Loss Attributing Qualifying Company. I gather it’s pretty much a standard company except that it can pass losses on to the shareholders.

See http://www.approved.co.nz/resources/laqc.php for some info about them.

GP

Brenda,

Regarding the shares, I wouldn’t personally put all that money into one share, as it leaves you too exposed if it falls – even with a blue chip. With $70K, I think you could buy at least half a dozen different companies without brokerage making too much of a dent (especially if you bought them yourself through an online broker).

Also,…[Read more]

Originally posted by aptam:
I dont think there is anything stopping you from putting the taxed amounts back into the trust
Getting money from a company to a family trust is not that straight-forward. Any method that is not equivalent to an arms-length transaction is likely to be deemed a dividend under Div7a, meaning more tax for the shareholder…[Read more]

Originally posted by terryw:
It only works for certain things which are GST exempt
FBT exempt.

GP

Terry,

There are witholding taxes when making distributions to non-residents. I know they apply to non-resident individuals, but not so sure about other entities.

GP

By my understanding, if the company buys the laptop for him, or reimburses him for it, then it’s from pre-tax dollars as laptops are exempt from FBT, even if used for private use. So as a salary sacrifice he would only be sacrificing the cost of the laptop itself from his gross salary, not the cost + tax (income tax I mean, not GST).

If he’s…[Read more]

Andrew,

I’m not sure, but I think I remember reading somewhere that retained profit in a NZ trust is taxed at 33% or 36% – or something like that.

Except for capital gains from investment, which are not taxed at all.

GP

Originally posted by smet:
3. Capital gains tax on companies is higher (though not significantly)
What do you consider “significant”?

The difference between the discounted CGT rate for someone on the top marginal rate and the company rate is 5.75% (allowing for the Medicare levy). If you sell a property for a CG of say $100,000, that…[Read more]

Shar,

I don’t know about having to do an Australian tax return for the NZ trust, but with a NZ trust you may have to declare any income the trust derives as yours even if you don’t actually have it distributed to you. This is due to the transferor trust provisions.

As has already been stated, I’d recommend you get the advice of an Australian tax…[Read more]

Geoff,

If you haven’t already sorted the issue out, you could download and take a read through this:

http://law.ato.gov.au/pdf/tr97-23.pdf

While not the easiest thing to read, it goes over the definitions of repairs, renewals, and improvements and what’s deductible and what’s not.

Cheers,
GP

Gumshoe,

Well the intention you’ve specified to the lender doesn’t match the intention you’ve stated here. You may want to stick with just one intention to avoid later problems.

I don’t see that being in a low income bracket would make any difference. It would just affect the rate of tax, not what percentage of the profits it was paid…[Read more]

Gumshoe,

As your intention is to develop the property to sell for a profit, rather than use it for generating income, then I don’t believe you’ll get the 50% discount. I think you’ll end up paying tax on 100% of the profits.

However, I’m not an accountant and this is just my understanding, so seek your own professional advice. An accountant may…[Read more]

Loanwolf,

I’d suggest you see a lawyer very quickly. From what little I know about it, trying to protect your assets after the proverbial has hit the fan is a bit late.

GP

Originally posted by terryw:
I suppose the trustee could arrange it so not income was distributed to the unit holder.
I think the issue is more that they may be able to force the trustee to buy back the units themselves – although I’m not sure if a unit holder has that right. It may depend on the trust deed.

If the units just matched a personal…[Read more]

Hi Chris,

so the Foreign Investment Fund (FIF) rules do not apply
By that, are you including the transferor trust rules as outlined in the Foreign Income Return Form Guide? It would seem not from your later comments – and the T/T rules there do specifically include NZ as a broad-exemption country along with a few other countries (unless it’s…[Read more]