If the trust’s income is going to be less than the tax free threshold there may be no tax benefit for the trust to claim depreciation. but it would still be added back to the cost base on sale, but there is an exception to this if the taxpayer doesnt know what the depreciation values are so the trust shouldn’t get a depreciation schedule if it hasn’t already.

see

Practice Statement Law Administration
(General Administration)
PS LA 2006/1 (GA)
Calculating cost base of CGT asset where there is insufficient information to determine any Division 43 capital works deduction

https://www.ato.gov.au/law/view/document?locid=%27PSR/GA20061/NAT/ATO%27

You need to apportion the cost base expenses between the 2 blocks and the best way to do that is to instruct a valuer to do it. The other block has a house on it so it cant be worked out on an area basis. Your valuation would be done as of the date of purchase. Main residence exemption can’t be used on vacant land and can only apply to 2 acres anyway

The trustee would need an express power in the trust deed to rent to a beneficiary.

But if the trustee as the same company you are referred to? There is a common law rule against contracting with yourself, even in different capacities. but the ATO seems to allow it for tax purposes. Best to seek legal advice

An asset held by a trustee of a discretionary trust is not an asset that you own, so it is the same as paying off someone else’s loan. It has various consequences so best to seek legal advice. One strategy might be to lend your cash interest free to the trustee instead and let them pay off the loan with the loan from you. Another may be to gift to the trustee.

charliefaddoul wrote:

I am receiving conflicting views from my lawyers and accountants and it is making it very difficult for me to understand things.

It doesn’t matter what an accountant says as this would require legal advice.

charliefaddoul wrote:

One of the things I have been told by my lawyer is that holding property in a trust won’t protect your assets from creditors if I ‘benefit from’ the property.

This might be taken out of context or is a bit vague. First what are you trying to protection the property from? Creditors on bankruptcy? A trustee of a discretionary trust can still hold a property and let a beneficiary use it, perhaps rent free, if they have the power to do this. the property could still be safe from creditors on bankruptcy of that individual beneficiary. but there are still many potential ways the property and the trust could be attacked. So it largely depends on how the acquisition and funding of that property was structured within the trust.

charliefaddoul wrote:

Therefore, I have been told that it does not matter what legal entity the property is owned by, as if creditors are chasing any money, my assets would be exposed, regardless of what structures they are in.

You say ‘my assets’ but seem to be talking about a different entity holding the assets. If they are yours then they are available to creditors. If they are held and owned by a company, for example, then at first brush they are not your assets – but who ownes the company, how did the company acquire the property, how did it get the deposit. All this determines the strength of the protection

charliefaddoul wrote:

My accountant gave the opposite advice, stating that the assets would be protected.

They would not be qualified or knowledgeable to give this advice – or covered by insurance.

charliefaddoul wrote:

Can anyone confirm this or provide an alternative view as it is becoming increasingly frustrating when the advice from accountants and lawyers do not match up?

I am a tax advisor and a solicitor (and lawyer) and your understanding seems to be defective so you might be asking the wrong questions and getting answers to these instead of learning how a trust or a company could help reduce the likelyhood of assets falling into the hands of creditors.

There are none in Australia as far as I know

speak to a town planner to see if it is possible to do first.

Mat-23 wrote:

2 – Our home we live in – is the property that is our business premises – seperate section of the building – so we claim the portion of that property for  tax that is used for our business – but not our living space.

This doesn’t sound good to me. I think you should get some alternative tax advice – might be too late to fix things though.

At the very least it might be worth shifting the cash in the offset to the loan on your main residence and to break this fixed period.

You could also consider investing in a different entity, a more tax effective one, and shift offset cash as an interest free loan to this entity. This will increase your deductions in your own name and shift a large chunk of income to the new entity.

If the trustee is going to borrow money it might as well open an account at the same bank it gets its loan from – ideally an offset account.

They are statements not questions

but

1. No that is not correct

2. No that is not correct – loans have no bearing on CGT