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  • Profile photo of The DIY Dog WashThe DIY Dog Wash
    Member
    @the-diy-dog-wash
    Join Date: 2003
    Post Count: 696

    Just wondering, if you sell a property that is held in a trust, what tax rate is used to calculate the CGT?

    Cheers
    Leigh K[biggrin]

    Profile photo of geogeo
    Member
    @geo
    Join Date: 2003
    Post Count: 1,194

    if the capital Gains goes back into the Trust,
    The Trust does not pay any CGT tax. You pay the Tax when you transfer the money to yourself for personal use as the beneficiary. Depending on how much you transfer, the Tax rate is thus calculated.

    Kind Regards,
    George.

    I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how

    Profile photo of The DIY Dog WashThe DIY Dog Wash
    Member
    @the-diy-dog-wash
    Join Date: 2003
    Post Count: 696

    OK, so when the trust does it’s return at the end of the fin year and funds are distributed to the B’s so to is the CGT obligation … Is that right.

    Thanks
    Leigh K[biggrin]

    Profile photo of geogeo
    Member
    @geo
    Join Date: 2003
    Post Count: 1,194

    From my understanding Leigh, you can keep the CGT and any otrher moneys in the Trust for as long as you want – you don’t have to distribute it to the B’s just because its a financial year.

    Its like a Trust fund for a child – its there till they reach 18 years – they can’t touch it beforehand.

    regards,
    George.

    I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how

    Profile photo of yackyack
    Member
    @yack
    Join Date: 2003
    Post Count: 1,206

    Are you sure? Sounds too good to be true? Can someone else confirm this?

    Profile photo of AUSPROPAUSPROP
    Participant
    @ausprop
    Join Date: 2003
    Post Count: 953

    I am not sure but I have a feeling that undistributed profits are taxed at the top marginal rate. ask a tax accountant or check out http://www.ato.gov.au



    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,190

    Trusts don’t pay tax!

    All income of the trust must be distributed at the end of the year to the beneficiaries who then pay tax on this income – including CGT if necessary. You cannot keep the income in the trust – if you do the trustee must pay tax at the highest rate

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of CastleDreamerCastleDreamer
    Participant
    @castledreamer
    Join Date: 2003
    Post Count: 288

    Absolutely right Terry,
    you can’t avoid the ATO by ‘leaving the money in the trust’ they will just tax the trustees on it anyway and at the top tax rate as Terry has said.

    I suggest get some sound advice to suit your individual circumstances as many of our circumstances here on the forum will be different to yours as well.

    Cheers
    CD

    CastleDreamer
    “+CF properties in NZ available now”

    Profile photo of westanwestan
    Member
    @westan
    Join Date: 2002
    Post Count: 1,950

    Hi all

    Just in case there is any doubt by people, CD and Terry are 100% right , the trust will be penalised financially by paying tax at the highest rate if it doesn’t distribute the profits at the end of each financial year.

    Remember that unearned income to children will be taxed at 66% if the money is more that the threshold, so sometime its best to speak to a professional to make sure you distribute the profits best.
    Also remember that donations to your local church can become distibutions from the trust, so next time you give money to the church make sure you write a nice healthy cheaque from your trust account.

    regards westan

    I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

    Profile photo of TerrywTerryw
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    @terryw
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    hi Westan

    It might actually be better to distribute the money to yourself and then make a donation to charity – remember you can only claim a deduction to a registered charity. This is because you may have a higher tax rate than the average tax that is paid by the trust.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of westanwestan
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    @westan
    Join Date: 2002
    Post Count: 1,950

    hi terry

    thanks for that

    the difference is that donations to a church are not tax deductable under normal circumstances (unless its a building fund or something like that). However a distribution from the trust means you can support a church with pre tax dollars.

    regards westan

    I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

    Profile photo of TerrywTerryw
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    @terryw
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    Westan

    Good point. I just checked one of my trust deeds and it has any charity as being a beneficiary and it classes a charity broadly including any church, religious institution etc. So even if it is not a registered charity, it can still be a beneficiary.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of geogeo
    Member
    @geo
    Join Date: 2003
    Post Count: 1,194

    Did you register your chosen charity organisation as a beneficiary and do you have to do this to donate to them. Thanks

    Regards,
    George.

    I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how

    Profile photo of westanwestan
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    @westan
    Join Date: 2002
    Post Count: 1,950

    Hi Geo

    it should be standard in trust documents to mention donations to charities etc, it doesn’t need to specifically mention the charity.

    regards westan

    I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

    Profile photo of geogeo
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    @geo
    Join Date: 2003
    Post Count: 1,194

    cool – thanks Westan

    I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how

    Profile photo of AUSPROPAUSPROP
    Participant
    @ausprop
    Join Date: 2003
    Post Count: 953

    yes, as an interesting strategy you could register your own church and effectively use it as a super/savings fund that you can get immediate benefits from rather than waiting till 65 (whilst promoting whatver it is you believe in). the ‘church’ could own a land holding, art,gold etc. if you aren’t ‘religious’ in the biblical sense you could set up a representation of the Agnostic Church, so everyone could benefit from this. Does anyone know how hard it is to register a charity or how you do it?



    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of westanwestan
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    @westan
    Join Date: 2002
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    Ausprop

    Oh i wouldn’t go there if i was you.

    Hey, but you could build a big house and claim its your church, but no you shouldn’t do it

    and a nice swimming pool and say its where you Baptise people, No no it would be wrong.

    oh i’d better stop i think i hear a thunderstorm.

    westan

    I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

    Profile photo of TerrywTerryw
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    @terryw
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    Ausprop

    Good idea. I beleive that you can find all of this sort of information ont he ATO site. The rules have tightened considerably in recent years, but it is very easy to set up a religious association – which could be classed as a charity under most trust deeds. But these would jsut be companies and would have to pay 30% tax unless they get the tax exemption which is separate.

    I think I read somewhere that sanitarium was a registered religious charity, but kellogs weren’t (incidently, both were started by fundamentalist christians) and therefore they did not have to pay tax. kellogs were saying it was an unfair advantage.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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