T

Should be just a one off application.Commercial loans may have a shorter term, but I don't think there would be any ongoing requirements to show updated income etc. You should ask your broker to confirm.

Richard

I think you will find there is no patent, but the name of a certain trust is trademarked. This makes it sound like a special trust with magical powers that only this firm has and many consumers have fallen into believing this.

Its like getting a trademark on the words "vendor finance". Anyone could do vendor finance but if the phrase is trademarked then others couldn't use the name.

The appointor's role is usually limited to having the power to appoint and fire the trustee. Depending on the deed the appointor may have to approve of some decisions too. If the trustee hadn't changed then the trustee would have had all the power they needed to run the trust. I can't imagine the appointor would be liable for anything unless he/she/it gave personal guarantees etc.

Hi M

My thai number is 08 56623852. I will be arriving there evening though.

How long will you be in Bangkok?

Thanks MWM

I will be staying in Sukhumvit area soi nana, and it appears to be above water still. Bit worried about getting there from the airport though.

There are no good books on Hybrid trusts. Don't trust the commercially available ones aimed at a general market as there are many incorrect stuff in them.

You will need to read legal books and tax alerts etc from the ATO. Try searching for Chris Batten too as he has a private ruling with the ATO allowing for the deduction of interest on his deeds. A good book to get on trusts is the "Trust Structure Guide 2011" but it is about $300 – it is available at some libraries (maybe later versions).

I think your accountant may not have it all correct.

Hybrid trusts can work, but they must be set up in a way so as the trustee has no discretion whatsoever in distributing to beneficiaries while units are issued. This means to get the negative gearing benefits against personal income the trustee must be required to distribute all income to the unit holders including capital gains. So there would be no tax flexibility while units are issued.

Beneficiaries of a trust cannot be changed without adverse tax/stamp duty consequences. But with a discretionary trust the trustee can decide which of the class of beneficiaries to distribute to. (not in a hybrid).

There is little to no asset protection advantages in using a unit or a hybrid trust. This is because to get the negative gearing benefits the units must be held in the name of the person. The units are property of this person and would be available to creditors if that person went bankrupt. So the creditors would then get all the income of the trust.

Not sure what you mean by "you can pay into the trust which can then pay for expenses, entitling the usual tax deductions"

You should not have more than 1 director, usually, because it doubles the risk and decreases borrowing capacity.

The cost to set up quoted is very high.

There are other benefits with using a hybrid which you haven't mentioned:
– Units can be purchased back by the trustee of the trust and it can convert to a discretionary
– The trustee may be able to borrow to do this and claim a deduction
– Units may be able to be transfered to SMSF later without having to change legal ownership of the property

In NSW only fixed trusts can qualify for the land tax tax free threshold. A hybrid could be a fixed trust I think.

When a trust makes a CG the gain can be distributed as per the deed. If the trust is a hybrid with units issued then it would be similar to owning in your own name. If a discretionary then the gain could go to the lowest tax payers. Hybrids could also result in double CGT because the trust would pay CGT and the unit holder could also be required to pay CGT on the sale or redemption of their units.

Getting at the equity could be tricky if the hybrid is in the unit trust phase. I am not sure and would have to think about it. If it was a discretionary trust the trustee could simply borrow more money and buy more property or onlend etc (if deed allows).

You must remember that trust assets are not your own assets. Trustees have duties to act in good faith etc to the beneficiaries or the unit holders of the trust. The trustee must keep all trust monies separate from their own personal money. If you have another family involved then you are leaving yourself open to a dispute down the track and it would be easy for them to show you have used trust money for your personal expenses.

Best to keep it all separate I think and then make distributions and deal with your money separately then

Never a good idea to buy without seeking proper advice. If you buy before setting up the structure there could be 2 lots of stamp duty.

It is also not a good idea to buy in a company because the company will be taxed at a flat rate of 30% with no 50% CGT discount.

The best structure for something cashflow positive is generally a discretionary trust or a SMSF. You could also look at buying in a unit trust with the units held by a discretionary as there is extra flexibility with transferring the units to a SMSF later and extra tax advantages.

It is not a good idea to buy property through a company. Losses can be carried forward, but there is no 50% CG discount.