- Rich FarMember@rich-farJoin Date: 2005Post Count: 10
As a studying Accountant and studious/achieving investor, I was taken ball&chain by Dale G.G’s ‘Trust Magic’.
1st read, cover to cover, took me less than 3hrs(including re-reading sections) as I was fully absorbed.
I must say, after reading Forum topics & contributions, I agree with the valued opinions stating that accountants(on average) probably know less of this topic than should be required. Since reading ‘Trust Magic’, I’ve consulted Tutors and colleagues in my quest of more knowledge(or clarification on Dales’ points), usually met by indecisive raising of the brows or an ‘I’ll get back to you later’, which somehow never comes.
As I am nearing my complete certified level of accounting, one of the questions I have is…can I(as an accountant}set up my own ‘Family Trust’? Secondly…if so, can I then claim my would be accounting fees(for the opening of the trust) as a deduction on my personal return?
Might sound naive or weird, but hey…there are some things ‘they’ just don’t teach.
P.S.- ‘Coastymike’…If you are reading this, I would really value your opinion.
Yes, Trust Magic is good isn’t it!
An accountant can set up your trust, but they will be simply buying one over the internet. You could do this yourself as well.
I don’t know about the costs. I have heard accountants say you can claim the costs, but I always thought the cost of estalishing a trust was a blackhole type expense.
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[email protected]GrregMember@grregJoin Date: 2003Post Count: 121
I agree with Terry – if you have an accountant set up a trust for you they will most likely either order it over the net or go to a legal firm that specialises in incorporating and selling shelf companies/trusts.
So basically they are just taking you details and placing the order on your behalf. So like you said this requires very little training or understanding.
As I understand it the costs of setting up a trust/company etc are treated as capital in nature (ie you can’t claim them unless you sell the business at some point).
GregPropertyGuruParticipant@propertyguruJoin Date: 2003Post Count: 1,502siahmkMember@siahmkJoin Date: 2005Post Count: 6
I don’t think you can claim set up costs like trusts – they’d be capital, wouldn’t they?
MelissaRich FarMember@rich-farJoin Date: 2005Post Count: 10
Thankyou for the responses so far, they are giving room for thought
When you say an accountant would(more than likely)download trust set-up(application?), would you be aware of how this is done, i.e. sites etc?
Your help is invaluable…thanks
I personally use lawcentral. costs about $257,
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[email protected]coastymikeParticipant@coastymikeJoin Date: 2005Post Count: 125
You can certainly establish an accounting practice through a trust structure but you should be aware of the various PSI rules and ensure that you comply.
With respect to the deductibility of costs for establish a business structure per S40-880, ITAA 1997, certain captial expenditure is deductible over five years if they were incurred in the establishment of a business structure.
Professional advice regarding the appropriate structure for operating a business will qualify as part of the establishment costs to be written off over five years. Also refer to ATO ID 2003/151 and 152.
I agree that a trust can be established by an individual through the internet but then you do not get any associated advice. For example if you were to go along and establish a trust through LawCentral will you have established a hybrid trust ? The answer is no because LawCentral only offer discretionary trusts online for $275. It does not offer hybrid trusts online and they are $440. No direspect to TerryW (I think he is great at providing advice) but if you went along to lawcentral and setup your discretionary trust and then wanted to neagtive gear through the trust then i’m sorry it won’t be possible.
Now you will pay an accountant up to $1,000 for a hybrid trust setup and then the next question is well what does the accountant do for the extra money.
Firstly you will be told that you can claim the setup costs over 5 years. I see that none of the posts have actually given correct advice and if on the top bracket you have just lost $500 in tax savings. (Always said that free advice is uaually worth what u pay for it – in this case it would have cost you $500)
Secondly they will have provided some basic advice as to whether the structure is appropriate and hopefully provided a checklist of activities that you will need to undertake (or the accountant will undertake) once the trust has been established e.g. establishing a bank account, registering for an ABN, GST, PAYG etc.
The accountant will then provide some advice regarding trust losses and the four rules that must be met if making trust losses and a family trust election has not been made. Whether a family trust or interposed entity election should be made and the implications of such. Information will be provided regarding franking credits and the impact of not making a FTE.
So although someone can go online and establish a trust themselves sometimes the client has purchased something that does not meet there needs. I have had clients purchase an online discretionary trust and then wondered why they could not issue special income units. Unfortunately they then incur the costs of a new trust PLUS my fees. A very expensive exercise.
Anyway for those who aren’t accountants and want to establish things yourself all i can say is lotsa luck.
Good post Mike, and some good points too. I wouldn’t recomend anyone to setup a hybrid trust themselves, also getting some good advice is a very good idea as you could save the fees in no time.
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