One misunderstanding there is tax. The corporate trustee is a trustee so it doesn't pay tax at all – unless a distribution isn't made. Any profit of the trust would be distributed to beneficiaries and they pay tax. If the beneficiaries income is low the tax paid may be less than 30% if the benefciaries income is higher then a company can be set up…[Read more]

hi AdamNot sure on the franking credits. Do a google for trusts and read any document from the major law firms. There is heaps out there. taxlawyer.com.au is a good one as is lawcentral.com.auAlso look at the ATO legal database.I just found these on shares and…[Read more]

Just keep reading. Read everything you can about trusts and SMSFsSee http://www.trustdeed.com.au for some good strategies on buying property in SMSFs. It sounds very good, but once you have the property and the loan you will be unable to access any future equity to buy more. This makes it unattractive to me.

hi TLCThanks for that. I don't want to make you feel bad after already investing so won't say much more! $9,000 pa is good cashflow.

I can't understand why you would buy something that you think may go down in value and will be difficult to sell. Really!

I think the franking credits would have to go with the unfranked portion.There are some things to watch out for with franking credits and DTs. The trust must make a family trusty election, and if there is a loss the franking credits are lost.

AdamYep you would have to notify the bank as the trustee is the legal owner of the trust property so the bank account must reflect this. Same with adding a company. If your trust is only going to be buying shares then the trustee doesn't matter so much. There is little risk of the trustee being sued – or none really – in owning shares so a person…[Read more]

YoungInvestor wrote:
Is it possible to have trusts with lives longer than 80 years? I think Ed Chan talks about their "Property Investment Trust" having a longer life, but is it possible to prepare this type of trust anywhere?

There is something know as the law against perpetuities which was designed to prevent rich families passing on their…[Read more]

Good work spud

I like bankwest too – you can get a high interest account to hold the cash and a normal transaction account to transfer it etc.

If you are building a house to keep and you sell and you have held the land more than 12 months you may get the 50% CGT discount ad pay no more than 24% tax. If you used a discretionary trust you may even pay less.

hi VitaMost trust discretionary deeds are worded in such a way as any company in which the trustee/appointor/named benefiary is an officer holder/director/shareholder etc then that company will be a benefiiary too. You could also name an existing company too if you wanted to.In Australia there is no gift tax and you could gift a property to a…[Read more]

Hi Scott – not sure about that.

After 80 years the trust comes to an end and its assets are transferred to beneficiaries.Why have 2 trustees? If just doubles the risk and possibly reduces long term borrowing capacity.It is very easy to change the trustee – you just have a meeting and the appointor appoints the new trustee and the old retires. but if your trust owns property you…[Read more]

not sure what a supplemental deed is, but the deeds can be modified, with great care, when need be. eg. the recent Bamford case regarding the definition of income made it wider. Deeds need updating ever few years as laws change. That is why it is probably best to just form a new trust every few years. Ideally have one proeprty per trust and when…[Read more]

It can also be a way to live off equity and to retire early. ie let loans capitalise and live on rents and dividends.Goodluck with the ATO

You cannot add beneficiaries later after the trust is formed or it will be a resettlement. That means the ATO considers a whole new trust is being formed and all the assets from the old trust are transfered to the new trust = stamp duty and CGT.But you do not have to add beneficiaries usually because most relatives will be included automatically.…[Read more]

YoungInvestor wrote:
Very interesting Terry. After reading that, I will be comfortable in allowing the LOC I use to purchase shares to capitalise interest (until it reaches the limit of course). I will definitely obtain a seperate ruling on setting up a seperate loan though – Seems a bit more risky and may come off as setting up a scheme. Just…[Read more]

That would be unfair, but luckily it doesn't work like that.Trusts don't pay tax at all, unless the money is not distributed.So if ABC Trust made a profit the company would pay no tax at all. The company's only role is trustee which is like a manager of the assets for the trust. It is the trust that makes the profit. The trust would then…[Read more]

You need the trust deed which can cost from $185 up to around $1000.Company set up costs $412 at asic Each state may also require you to pay stamp duty on the trust. Was $200 in NSW, but recently went up to $550 I think. QLD was Nil in the past. Not sure about VIC.If you need some advice it will cost you a bit more on top of all this – and it a…[Read more]