Terry
Interesting idea. I’m not sure if I understand how this works. If you make a distribtion from one trust to the other, then certainly that is income to the beneficiary trust ?
So basically what your saying is you just shift the funds from one trust to the other back and forth each year ?
I dunno why Part IVA wouldn’t catch this…its kind of written as a generic ‘catch all’ type thing.
Now this is getting interesting…[cap]
cheers,
andrew.Terry,
There are witholding taxes when making distributions to non-residents. I know they apply to non-resident individuals, but not so sure about other entities.
GP
I don’t know why, but apparently this ‘loophole’ had been closed down by the ATO several years ago. Maybe the withholding taxes.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Andrew,
I advise that the NZ Trust also has an independent NZ resident trustee, whether as a company or not. In this way, there are two resident NZ trustee companies.
The Accounts and tax returns are prepared and lodged in New Zealand. The minutes are maintained and recorded in New Zealand. Buying trips are obviously conducted in NZ, and negotiations with lawyers and financiers are conducted in NZ.
We build a case that the NZ Trust is adminsitered and controlled from New Zealand. If the Australian directors of the NZ resident trustee company choose to agree with the ATO that the Trust is controlled or administered from Ausralia, then they shoot themselves in the foot.
If they contend that the Trust is administered or controlled from New Zealand, then the ATO will have a job on their hands to prove otherwise.
Your assessment of the tax implications of an Australian beneficiary receiving an income distribution from the Trust is correct. Firstly, tax is paid in New Zealand, then the income and the foreign tax credit are declared in the Australian tax return.
The CGT on capital gains distributions can be avoided by coming to NZ for 6 months plus at a planned time, to qualify as a NZ tax resident, receive the capital gains distribution and not declare it in Australia as you were not a tax resident at the time.
There are other ways to pay the capital gains without CGT, where this is not a viable option.
Other options involve international tax planning entities. An LLC in the USA is one of those options.
Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne Bay
Auckland New Zealand
Ph +64 9 360 3259
Fax +64 9 360 2180
http://www.masteraccountants.co.nz
You must be logged in to reply to this topic. If you don't have an account, you can register here.
