I think you are supposed to claim expenses when they are incurred. ie in the tax year incurred.

International tax is a complex area and it will likely cost you a fortune to get your taxes done properly. Have you got a tax agent handling this for you?

A trust is where one person (trustee) holds property for another person or people (beneficairies).

With a discretionary trust the trustee controls the property and the income. He/she/it has discretion on who to give the income/assets of the trust too. So no one beneficiary has a claim on the assets of a trust.

If a beneficiary where to go bankrupt their interest in the trust is safe from creditors, generally.

If the trustee where to go bankrupt then the trust property does not form part of their estate and generally would not be available to creditors.

Note, only one main residence is allowed between spouses. So if the partner is a spouse (married or defacto) and has a main residence then the 6 year rule may not apply.

hi Johan

First thing I notice is that one of the business loans is PI. Changing this to IO will assist reduce the repayments. And IO would be more tax effective as you would want to divert money to your home loan first which is not deductible. PI on a business loan means you end up paying more tax.

It is also unclear which loans are secured by which properties and you have your parents home in there valued at $360k, but business loans of about $520k so I think you may have cross collateralised your home and your parents home to get these. This is dangerous because you have your parents home on the line and because you have crossed securities. It could have been set up much safer perhaps.

But yes you could sell. There are 3 problems to this:
1. You would be selling to a company which you control.
2. You would still have to make payments
3. stamp duty.

If the aim is asset protection then there will be little if any in doing this.
Your other company would still need a loan of $400,000 or so that buy the house.
large amount of money wasted in stamp duty and legals, and

4. You will still have to qualify for a new loan. If you are having problems now then the bank may not lend.
5. there would also be tax issues to consider.

What about this:
– trying to change the PI loan to IO
– consider putting the business on the market
– maybe negotiate with your bank to re-extend the terms of the loans. eg. if you have 30 year loans which have been going for 5 years try to restretch it out to 30 years again. but this wouldn't affect IO repayments.

Generally loans revert to PI after the IO period expires. So if you have a 30 year loan with 10 years of IO it will be 20 years PI after year 10. Some banks may offer you to extend the IO period, others will make you supply new payslips etc (ANZ).

hi Vesali

Yes, you should never own assets in a trading business and never have too many eggs in the one basket. If you were running a business then the safest thing would be to have one company trade and another company own all the assets such as tables and chairs, computers, photocopiers and then another company supply the staff.

But if you own the shares in all these companies and you go down then creditors can get hold of your shares and thereby control the companies.

You should look at discretionary trusts used in combination with a company as trustee. I think your developer mate would own the properties in the trust with the company as trustee. This adds greater asset protection and tax flexibility.

If a company goes into liquidation the director is not usually banned. It would only happen if the director did something illegal or was charged with an offence relating to finance/fraud/corpations act etc. There is a data base of banned directors on the ASIC website you can search – look up Rivkin!

The 2 companies are separate legal entities. As such they are generally not affected by each other unless there are transactions between the 2 which involve unfairness or less than market value transfers etc.

I don’t know enough about super to comment. But there are many things to consider and you should probably go and get a 2nd and 3rd opinion from a special SMSF advisor.

Hi Paul

With this there are at least 2 aspects of asset protection.
1. You as an individual were be sued and to go bankrupt.
2. The owner of the property is sued.

When an individual goes bankrupt assets held as trustee for another person do not form part of your estate. Also an interest in a discretionary trust is not considered property and does not form part of your estate.

With 2 if you use a company as trustee then you will be adding another layer to the protection if something happens in the property – tenant electrocuted, collapse of a wall killing someone etc. generally the company and trust will wear the loss and not yourself as you would be only director and shareholder. There are exceptions of course.

A unit trust is good to hold assets as it enables transfers of ownership/control easily without changing the title deeds. But units are property and could fall into the hands of creditors if you were to go bankrupt at any stage. hence owning them in a discretionary trust. The DT will also offer tax flexibility

This is not a hybrid trust, but something different. A hybrid trust is one trust which has the ability to issue units and also has a discretionary component. Your unit trust could be done as a hybrid with no discretionary component at issue, but it could be possible for the trustee to buy the units back off the trustee and convert the unit trust into a discretionary trust. This can be good because the trustee could borrow to buy the units and the borrowings tax deductible.

If you do set up a structure with yourself as trustee you may save $500 but you will be taking a lot more risk with your personal assets (bank would get a personal guarantee anyway so if the project fails your assets will be at risk anyway) and you will lose the flexibility of ownership via a company. It only costs about $212 per year to have a trustee company.

I would suggest you read this whole thread http://www.somersoft.com/forums/showthread.php?t=71494 on trusts as there are some great posts in there.

You would generally need the advice of a lawyer and an accountant and a mortgage broker on something like this as you must factor in the ability to get finance.

First would suggest you ask your own accountant and ask him for reasons for his decisions. Then report back here and we will critically exam the response.

in Sydney?

for the tax side see http://www.strategicwealth.com.au/