What you can do with a hybrid trust though is borrow money external to the trust and use it to buy income units. That…[Read more]

Hybrid trusts can “transfer” (via ‘units’) the loss to personal income
Hybrid trusts cannot distribute losses. What they can…[Read more]

GP

Companies can’t get the 50% CGT discount that individuals and trust beneficiaries can, potentially…[Read more]

Originally posted by Eleven:
the asset is 100% protected
Small quibble: an asset is never 100% protected – especially not if you’re married!

And in that scenario it’s only protected against you being sued. It could still be taken if the trust itself (ie. the trustee) is sued.

Cata:

Make sure that you can change beneficiaries if you…[Read more]

I notice they never give examples like: if you’d invested $X in AMP in 1999, you’d now have lost 2/3rds of your capital.

Or, if you’d invested $X in Air NZ in 1999, you’d now have lost over 90% of your capital!

Yes, it’s so…[Read more]

I’m only going from limited knowledge here, but…

Originally posted by munjy:
the purchase of anything used by any business to be income producing is tax deductible
Not so. Only expenses can be claimed, where an expense is a non-recoverable outgoing. When an asset is purchased, all that’s happening is an amount of cash is being replaced…[Read more]

So if the property is positively geared, where there is extra income…[Read more]

While there may possibly be some special situations for certain types of businesses (although I can’t think what), I would say…[Read more]

From my understanding, you can do all of that with just an HDT, except for the bit about transferring to super. If that’s important, then the separate unit trust may be necessary.

Not sure about having a trust as trustee of another trust. I wouldn’t have thought a trust could be a trustee, since it’s just controlled by its own trustee. I…[Read more]

And one thing to consider regarding “investing” (as opposed to doing business) in a company is that you’ll lose the 50% CGT discount for investments held for more than…[Read more]

GP

Don’t remember it having too much about tax and stuff, but it covers a lot about share trading and technical analysis. Nothing much about fundamental analysis though from memory.

GP

It Seems To Me …

GP

So when you say your preference is for a discretionary trust, would you include a hybrid trust provided no units are on issue?

If so, then ISTM that a hybrid trust would be more flexible, being the same as a discretionary trust if no units are issued, but with units available if circumstances favour their issue (eg. negative gearing).

GP

GP

GP

Originally posted by zen1:
where you can put an asset in a trust name but still get negative gearing benefits. I just got off the phone with my accountant, she said I can’t put say an IP under a trust and still get a negative gearing benefits.
You can use a hybrid discretionary trust, which is a discretionary trust that can also issue…[Read more]

But if you have the asset in your own name, I think you lose some flexibility. For example, if you’re the high income earner and have the asset in your own name for negative gearing, but later the asset becomes positively geared, then you really want it owned by someone else. I think with a trust it would be easier to get around that…[Read more]

Originally posted by Cata:
There are many advantages ofa discretionary trust that are more flexible than a family trust
What do you mean by “family trust”? Is a discretionary trust not a family trust?

You do not need a hybrid trust to claim the intrest, there are some exelent stratagies for this using less complex structures
Can you give…[Read more]

See:

http://www.ato.gov.au/individuals/content.asp?doc=/content/20046.htm

GP

Australia has specific tax laws that relate to Australian residents (ie. people) using foreign-resident (including NZ-resident) discretionary trusts and companies.

If someone is an Australian resident for tax purposes, and the trust or company is NZ-resident, that individual may still be taxed on the income of the trust or company…[Read more]

Originally posted by coastymike:
The trust loss provisions do not relate to capital losses. These capital losses should be able to be carried forward and offset against any future capital gains made by the trust.
Thanks. That’s good news at least [].

Fortunately I don’t have any revenue losses to worry about right now. And the issue…[Read more]

Originally posted by coastymike:
Trust losses will need to be carried forward but this is subject to a number of rules regarding the carrying forward of trust losses. If the trust has made a family trust election then the rules are a bit more relaxed but again their are pros and cons associated with a FTE.
May I ask a few questions to…[Read more]

GP

At least that’s how I understand it.

GP

If it’s in a trust, then you can’t offset the losses against your own income or capital gains, as losses can’t be distributed from a trust.

There are also issues with carrying losses forward in a trust.

GP

Originally posted by Unicorn:
The idea of a coy as beneficiary is great, (other than its getting complicated), but worth it if you’re on the top marginal rate.
This sounds good at first glance, but there are issues to consider:

Once the funds are in the company then they’re company funds, with rather strict rules governing their use.…[Read more]

Otherwise not that I know of – and the shareholders being…[Read more]

The properties in your own name should already be able to be negatively geared against your other income.

GP

You could try NickM here:

http://www.strategicwealth.com.au/

Basic setup costs are around the $1100 mark for a trust and $1500 for a trustee company.

GP

If you’re considering using any sort of foreign entity, I’d recommend seeking advice from an Australian lawyer or accountant who has experience with foreign investment, as there are special tax rules regarding controlled foreign companies and trusts.

Cheers,
GP

In a nutshell though, an HDT allows negative gearing with the individual borrower (not necessarily the trustee) claiming the losses against their own income, and CG being discretionally distributed.

I think to transfer an existing property into a trust you’d be looking at…[Read more]

I think for asset protection reasons, and simplicity (ie. tax returns, etc), the idea normally is to have the trustee company do nothing (else) and own nothing.

GP

GP

The units in an HDT or unit trust provide a fixed entitlement to income from the…[Read more]

I’m no accountant, but my understanding is that no, you can’t claim interest deductions yourself for an IP in a standard discretionary trust.

As far as I know, the only way you would be able to do so would be to lend the money to the trust at the same or higher interest rate as you borrowed it, which would normally be pointless.

I’ve seen…[Read more]

http://www.strategicwealth.com.au

Just to make it a little easier to find [biggrin].

GP

I can’t answer your questions, but what you’re describing sounds like a testamentary trust. Ask your advisor about them.

Cheers,
GP

I’m no accountant, and have just read up a little on this for my own benefit. You should seek professional advice on this issue.

You can read about it yourself in the tax act if you’re that much of a masochist:

http://tinyurl.com/5n6lk

You want Schedule 2F under the 1936 act.

Also, if you do a search there on “trust losses family…[Read more]

To get the loan out of the trust, I don’t know if you could perhaps refinance the IP by getting the loan in your own name so you could buy units and then pay back the trust loan. Whether or not that would be worthwhile might depend on how much it would all cost to do (especially if you have fixed part of the loan).

And it wouldn’t cover…[Read more]

An interesting point. I wonder though, since the loan was used to purchase units even though it’s secured against the IP, if the IP could be sold and the capital returned to the bank without the units being redeemed. I would think (or at least hope, as a unit holder) that there’d be a tie between the injected capital and the units that…[Read more]

I’m no lawyer, so I don’t know if it’s that simple or not, but I’m…[Read more]

GP

However, if you bought units with…[Read more]