Interest on money borrowed to 'invest' into a discretionary trust is not deductible as because the trust is discretionary so there would be no guarantee of a return. (compare this to a unit trust where there would be a fixed percentage).

As Dan said you can either gift or loan and each has different consequences in terms of asset protection and tax. A loan is returnable so it is always your money. A gift is not, but it may still be at risk if you were to go bankrupt as it could be clawed back.

If you are using redraw (watch out for mixing loans too) you would generally on lend to the trust at an interest rate equal to what you are charged. The net result is your income from interest = the interest you pay and so your personal tax position remains the same and the trust ends up claiming the interest as a deduction. If you want to charge less then your claim may be deemed to be non commercial – why would you borrow money and lend it and make a loss. If you want to charge more you will be draining money from the trust to your personal income – which may mean more tax.

You could redraw and gift to the trust – but then you couldn't claim the interest.

Companies are governed by the Corporations Act. It is a long act and there are heaps of rules surrounding companies so it is a big responsibility in being a director and running a company – even if you are the only share holders. The company is a separate legal entity and you must keep its assets separate and shouldn't use them as if they are your own or you could be breaching various director duties or other laws.  So there is much more complexity in running a company than buying something in your own name.

A trust is not a separate legal entity, but a kind of relationship. It is the trustee that is the legal entity and this can be a company or a person (or both). It is the trustee that owns the assets and enters into contracts etc. Trusts are governed by State laws and the common law. Trustees also have many dutites – to act in the best interest of the beneficiaries etc. If you have a company as trustee you will be governed by these laws and the corporations laws and so it is even more complex.

Then there is the complexity of Tax laws surrounding companies and trusts. These are especially complex and few accountants have good understandings.

The rules surrounding land tax are also complex and confusing and differ from state to state.

For tax purposes trusts are treated as separate entities as are companies, so if your trust has a loss you cannot use this to offset personal income as the two are unrelated. This can create problems if you are buying a negative geared property – you probably cannot save tax and so it will cost you more initially. Your trust may also need to make a family trust election to carry forward the loss and this may restrict the beneficiaries in the future.

Accounting fees will increase because of the complexity and you may need trust deeds updated every few years as well you may need legal advice every now and then to make sure something you want to do is permissible so it can be costly.

There are also clawback provisions and other provisions in the bankruptcy act which few understand or realise that this can invalidate many of the asset protection aspects promoted. 

Sounds like the company would have paid tax on that money and it is retained earnings. It may be possible for the company to issue a dividend – but the problem is that the shares are probably not owned by a trust.

The company probably can't get the money into a trust easily. The company could possibly donate it to the trust – but then you may have issues and would need legal and tax advice as the directors have various duties which they need to keep in mind.

Another option is to transfer the shares to a trust and then issue dividends – but stamp duty and CGT may apply.

The company could also loan the money to a trust. It would need a proper written agreement to do this and also more issues. Depending on shareholder's incomes it may be possible to gradually get the money out of the company without paying tax. BTW companies pay 30% tax, but here it will be the shareholders who would pay tax if the money was paid to them. Because the company has already paid tax on this money they would get franking credits and so they would not pay any tax, and may even get some back, if their incomes are low and they are on a tax rate of less than 30%. If their incomes are high, then they may pay more.

It could be that some of this money may be owed to family members from initial loans years ago too.

The company may also be able to employ family members on low incomes who wouldn't pay much tax if any, and they could then gift to the trust.

Also look at asset protection issues of gifting to a trust and later going insolvent – the money could be clawed back.

It may even be better to leave the money there and for the company to lend money to the trust for deposits to buy property and the trustee borrowing the remaining x% from a bank.

In summary, it is a lot of money so you should be seeking further advice.

I would suggest you speak to your lawyer. Its probably not a good idea to exchange without them having insurance. If you have already exchanged, was the insurance a condition of the contract? You may be locked in anyway.

Don't worry too much, at least you have begun to invest – and most people get it very wrong.

This is why it is a good idea to use a solicitor rather than a conveyancer – so you can get legal advice as well.

Are you talking about a contract for the sale of land or a home/land package type deal. If just land you can settle and then find another builder. Without the builder having insurance you probably won't be able to get finance for the construction part – if you need it.

I would be wary of having more than 1 director of a company – there is no need and it creates unnecessary risk.

I think the best structure is a discretionary trust and having a company has trustee will help reduce the risk and to make it flexible. If you need a further income to assist borrowing then one of the siblings could go guarantor to the loan without taking the risk of being director – remember if something happens the director usually goes down with the company, and also guarantors to a lessor extent.

I am not sure on what you mean by an employee benefit fund – could you expand on this a bit more?

Usually the seller can charge penalty interest and then issue a notice to rescind the contract if they don't settle within a certain time from – usually 14 to 21 days. If settlement doesn't occur by the date on the recission notice then the deposit can usually be kept. If you subsequently sell the property for less you may be able to sue the first purchaser that didn't settle.

95% loans never totally went away. A few banks continuted to offer them and now more banks are reintroducing them. There are even 100% loans, and one which is 103% (- or 105%?? I started a thread on it a few weeks ago)

Yes, thats the way to go.

If you were to keep paying your wages/rents into the loan and then withdraw living expenses each week you will be rapidly decreasing the deductible portion of your loan and could end up with a large loan, but none of it being deductible.