[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

September 8, 2011 - 3:22 am

Dear Angel,

 

My heart aches for you, when I lost my brother (Martin) I was pregnant at the time, also my hubby and martin were best friends since childhood.

Martin passed away not long after my marriage and wasn’t able to meet my two boys.

 

The legacy of my husband and Martin friendship still continues….

My two boys are a look alike to my husband and Martin.

 

God bless you

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

August 31, 2011 - 11:30 am

Thanks Terry, for adding the link.

I googled and studied on Cumins case, and it was interesting… That means I have to get legal advice before going ahead with the transfer.

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

August 31, 2011 - 6:43 am

Thanks guys for the given advice,

I will need to look at the bigger picture, I Would need to sit down with a knowledgeable accountant and work with some numbers.

" I’ll rather pay today dollar than tomorrows".

Cheers : )

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

August 31, 2011 - 12:40 am

Yep, the wrong advice has dug a massive hole in my pocket! To make it worse he is a distant family member too.

Terry, you probably aware that I have recently set up a DT  to purchase another IP.
Ideally, to minimise risk I should create another DT for the transfer.
 Will there be any risk if I was to have the same trustee?

 "Asset protection is weakened by transferring assets".

Does that only apply to being bankrupt?
What if someone was to sue us? Are we safe in that matter?
Is there a period of time where the Bankruptcy Act has the power to reverse the sale?

I appreciate on any given advice. thanks

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

August 30, 2011 - 1:39 pm

Thanks Mike & Terry for the replies,

Interesting.. Terry you have mention that asset protection will be weakened by transferring an existing asset to a related trust. Does that also include by having a corporate trustee?

Mike, My accountant is stupid! I confronted him in regards to our plans and goals before the purchase. It seems that he wasn’t too fond of having complicated structures, and said to just go simple and purchase it under our names. He also said that inflation will raise the tax bracket so no need to worry about legally minimising tax.

 We are going to ditch our accountant; we’re in the process of searching for a new accountant now.

In the meantime, I am crunching the numbers. Probably best to pay stamp duty again. Ouch!

The property was purchased nearly a year ago with a negative gearing of nearly 5 K per annum.
We knew we had made instant equity from day 1. The selling agent was not local, wasn’t familiar with the rezoning on some of the streets in the suburb. The vendor was a motivated seller.

So, if we were to pay stamp duty now, I suppose it would be market value? An expensive lesson learnt! I guess I will be better off transferring sooner than later?

We have got finance ready to purchase again and if I were to pay stamp duty again on the transfer will slow us down on reaching our goal.

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

August 9, 2011 - 1:21 am

Hi George,
I find it interesting though,there are 2 types of people. The ones that are still spending don’t care or are unaware of the economy. Where as the others are afraid of where the future will be heading and is cautious on their spendings.
We own a mixed business, liquor and grocery. Our grocery has dropped in sales.
But, our liquor department sale has been stabilised, even with the CPI increase we just had.
I was brought up in a family where we all had to be in business. I have found that our family member who owns a business in the more prestigious area is more affected.

We have just finished with a minor renovation in the grocery department, hopefully it can pick up.

In regards to property investing, I have to agree with JPCCM. My brother purchase another IP 3 wks ago, my parents a week ago and I am still house hunting for bargains!
Good luck with it all!

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

July 27, 2011 - 2:45 am

Hi 4jojo,

The advice I was given by my accountant and another accountant firm. They both suggested that a DT with a corporate trustee should have an ABN.
Regarding about the loan agreement, you can write the agreement yourself unless you wish to have a solicitor to draw up the contract.

Also, from a solicitor’s advice I recently went to consult. A Div 7A only applies when you borrow money from a company.
 But, a company can lend/ borrow from another company without a Div 7A.

Hope I have  helped you with your concern.

Cheers

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

July 25, 2011 - 12:23 am

Thank you to all! This forum has been very helpful 

 I am going to see my accountant this afternoon to get his opinion before I sign any RE deals.

Cheers

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

July 23, 2011 - 9:56 am

Hi Terry,

Thank you, for making it clearer to me.

If it’s best to write loan contract, would a solicitor need to be involved?
Also regarding to my first post, which bank account needs to draw out the cheque?
 I would like to make an offer on a property, hopefully I can get a better understanding investing through a DT.

Kind regards

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

July 22, 2011 - 1:02 pm

v8ghia wrote:

HI,
If you are paying a deposit to purchase the property, and seeking finance then for the balance, you MUST pay the deposit via the trust or you will be in breach of SMSF legislation, which could have serious repercussions for you. You cannot 'reimburse' a third party from the SMSF for the deposit. Of course, you could make a gift/contribution to the fund for the deposit amount. Make sure you check this out in more detail before you do anything with a finance professional.

All the best.

Thanks v8ghia for the advice,

Does that mean I have to transfer the deposit amount over to the trust account? From there I write the cheque?

Let’s say for example…
I borrowed 100k from the IP loan interest at 7% .
Then lent it to the trust to invest; charging the trust interest on what the bank is.
 Wouldn’t the end result cancel each other out?

Hmmmm….Looks like I have to go and see an accountant before I do anything.

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

June 11, 2011 - 2:59 am

Terryw wrote:

I am an answerer!

  LOL

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

June 4, 2011 - 12:53 am

Thank you for the above advice.

I have gone to see a solicitor last week to seek advice.
You are correct Terry; changing appointors would not resettle the trust.
I had a debate with the solicitor that I believe a minor could be name as an appointor in a Will. I am assuming as long as the minor appointor has a guardian.
Am I correct on this? Can anyone send me any link to the answer towards this question?

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

May 4, 2011 - 11:21 pm

Shape wrote:

If the directors solo income is from this "company" then its Self employed. Regards Michael

Hi Michael,

If that is the case, hopefully changing the ownership structure of the business does not affect me. I have been self employed in the same business for more than 8 yrs I wouldn’t want to wait for at least two years to qualify for a home loan if I did change the ownership of the business

Cheers

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

April 20, 2011 - 7:46 am

Hi Terry,

My accountant has got back to me on the above question and you are spot on!
The "Appointer" they believe can't be sued by an external party, so the role should be safe.

regarding to the RE contracts, you are right, the directors of the trustee company signs the contracts.
So if that's the case what's the cons and pros of having 2 directors?
or should I only have 1 director as myself, cause I am pretty much the one who's closing RE deals.

Oh! I forgot, he did mention that if you have 2 directors (hubby & I) if either directors was sued they can resign and step aside. 

Once again, thanks for answering to my questions.

st81hp79

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

April 18, 2011 - 3:28 am

Terryw wrote:

There is a very expensive book out there called something like "Drafting wills and trusts" which is a good read. It outlines the anatomy of a deed and explains each clause in a deed and what it is for etc. Costs about $350 but I think there is a CD included too which contains draft deeds and different clauses. This book is available at Sydney Uni library if you have access.

Sorry for dropping in…

Hi Terry,
I am interested in the book you have recommend on the above post.
I would appreciate if can  get back to me on who the author is? and the exact  title of the book? cause I have been browsing on the internet and came a cross a few with the same title " Drafting wills and Trusts" with all different prices depending on the author.

Thanks
st81hp79

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

March 31, 2011 - 2:22 pm

Kuradji wrote:

Hi I used the Sydney mob. (Pymble) Paid the $500-ish for the financial assessment. It took 2 hours and the guy was very personable, but I got nothing out of it. Also you have to fill out forms so they know everything about you before you go, but of course in my case the guy I was supposed to see was replaced at the last moment with someone else who had not read any of my documents and found it difficult to get on top of all my bits and pieces – I never said my finances were straightforward A-B-C – which is why I was trying to get some really good advice from people who seemed to say they could think outside the norm. So I travelled for 2 hours in horrific Sydney morning traffic, was there 2 hours, paid $500 and wasted my day.

I Had the same experience but with C&N, on the time of my appointment the financial planner told me that they haven't received my Assessment Form from head office.
Luckily.. I brought along a copy in my bag, they were trying to read quickly flicking through my assessment Form.  They should have requested another copy from head office  for them to review before the appointment.

I spent $395 for a Financial Health Check but half of the session before seeing an accountant was spent going through  my assessment Form with a financial planner.

Well.. I am still searching for a good accountant( Melbourne), who genuinely is a property investor them self and is interested in helping there clients.

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

March 11, 2011 - 7:22 am

 Hi Terry,

We have had the business for over 8 yrs – the first 5 yrs we did split the income evenly until my hubby went back to work full-time.

My accountant suggests to distribute only a percentage of the business income to my husband to minimise tax. And he mentioned that it's possible only if the partnership is husband and wife – and if either one of us works fulltime outside the business.

Also, I had thought about  transferring the business to trust/ Company "A" and offset trust   "B" which holds negitve IP.
But if I were to sell the business as a partnership the tax on the 'good will' will be  25%. So is there a tax discount if i were to sell the business via the trust/Company?

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

March 11, 2011 - 5:31 am

Hi Terry,
Sorry for my ignorance, with a unit trust do you have to distribute income exactly according to the units you hold in the unit trust?

If so, then I am better off setting up a DT with a corporate trustees because of its flexibility in distributing income.

And if I were to establish a DT with corporate trustees, how difficult is it to obtain finance? would it be the same principle as to financing in your own name?

Oh, that reminds me i have to email C&N last tax return, apprently the accountant at C&N says it's impossible for me to distribute a percentage of the income to my hubby because we are partnership owners to the business, the income would have to be 50/50. He is very curious and would like to have a quick review at tax return.  

Cheers
st81hp79

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

March 10, 2011 - 9:29 am

Toob wrote:

Hi st81hp79

I am in exactly the same position and have an appointment with C&N in 2 weeks.  Please let us know the outcome of you meeting as too what they suggest is best.  I am nervous about the PIT due to alot of information suggesting how difficult finace can be to obtain.  Also unsure how the ATO views this structure.

Cheers

Toob

My Feed back about C&N, I  was disappointed with the outcome. I spent half an hour with them going through my Financial Health Check because they did not receive a faxed copy of my Form in which the Sydney head office should have already faxed to them for  them to review my details before  the appointment.

Also, be prepared to ask questions (and write down notes) as they will only answer to your questions. eg if terryw had not mentioned about the PIT being set up in SA, I doubt C&N would have said anything.

And with 'obtaining finance' I have asked C&N that question as well – they suggested speaking to the C&N Finance team, obtaining finance  wouldn't be an issue but it might be more difficult if you went and got the finance yourself. (so I guess it is difficult to obtain finance)

Let me know about your experience at the appointment

st81hp79

[st81hp79Member@st81hp79Join Date: 2010Post Count: 35]

March 10, 2011 - 8:24 am

Terryw wrote:

If you want to set up a "PIT", you need to ask some serious questions, especially about the "never ending" bit.

It is true that SA is the only state with no legislation against the laws of perpetuities, but there are well established common laws against perpetuities – would these apply if there is no legislation?

Are they relying on the "what and see rule" regarding perpetuities. ie wait 80 years and see if the trust offends the laws against perpetuies –  where a trust or a will may/may not offend the rule, then the trust can be valid as the rule may not apply in 80 years (everybody named may be dead before then).

What does it mean to "have" a SA trust? What determines the location or domicile of the trust? Is it:
– the governing State as noted in the trust deed?, or
– the location of the Trustee?, or
– the location of the property of the trust? (what happens if some property is in VIC, and some in SA)?
 
You are also not restricted in setting up a SA trust with any particular firm.

Also, if you are going to have units issued by the trust – what are the CGT implications on the sale of the property? Does the trust need to redeem the units (and unit holder pay CGT) and then the trust sell the property and it also pay CGT?

Hi Terry w,

I'm glad that you have join in this thread, I have learned a lot by reading your post

I had gone to  the appointment with C&N today, the accountant there explained about the  "PIT"
–  Takes 3 weeks to set up  the trust, cost approx $3500
– The trust will be set up in SA, stamp in SA and then VIC so the  "never ending" bit can affect in VIC
– The trustee /property does not require  to be in SA
– PIT is like a Hybrid Trust  (Is that something i need to steer clear from?)
– Preferably 1 to 2 properties per trust ( minimise your risk in being sued and reduces land tax????

The accountant told me  PIT  has been for around 5-6 yrs, has all the ticks from the ATO. He also mention Hybrid trust and DT are favourably looked at by the ATO lately.
Also, he advise I should not set up a DT. The rule's have change "no cloning" once  the trust has lasped after 80yrs the asset will be sold at market value. Ouch…

He will send me  an email regarding more information about the ruling in the PIT.

In addition to your comment above" What and see rule"
Maybe it's best for me to use the same "vehicle" buying property in joint names

Or should I see other accountants for second opinions?
Any experienced property investing accountants out there? (south east Melbourne)

Cheers,
st81hp79