HDT question

Viewing 8 posts - 1 through 8 (of 8 total)

SAFFA
Member
@saffa
Join Date: 2005
Post Count: 9
October 26, 2005 - 10:24 pm
Hi All,
A quick question for the Trust guru’s!
With a Hybrid discretionary trust, is the interest on the loan deductable against my salary or is it deducted off the Trust’s profit?
Giving that the loan is in my name but the property’s title is in trustee’s name (ATF The X property trust)
Thanks
KLH
redwing
Participant
@redwing
Join Date: 2003
Post Count: 2,733
October 27, 2005 - 1:26 am
Your personal tax..
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
SAFFA
Member
@saffa
Join Date: 2005
Post Count: 9
October 27, 2005 - 2:38 am
So if the property had rental income of $25K and expenses(excluding the loan) of say $5K this would leave $20K to be streamed to the unit holder(myself).If I earned $70K/annum salary the interest costs on the loan of $19K would be deducted off my taxable income so therefore I would pay tax on $51K.
Sound right?
KLH
cata
Participant
@cata
Join Date: 2005
Post Count: 559
October 27, 2005 - 4:22 am
Sounds Ok. But the $20k you earnt from the units would be taxable, making your taxable income $71k.
CATA
Asset Protection Specialist
[email protected]
SAFFA
Member
@saffa
Join Date: 2005
Post Count: 9
October 27, 2005 - 5:25 am
Thanks Cata,
Could I stream it to my partner who is not working?
KLH
redwing
Participant
@redwing
Join Date: 2003
Post Count: 2,733
October 27, 2005 - 11:07 pm
Thats the added bonus with that type of structure isn’t it..you can allocate income to the the beneficiary in the best position to benefit?
Notwithstanding the other benefits..
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
cata
Participant
@cata
Join Date: 2005
Post Count: 559
October 28, 2005 - 8:01 pm
Sounds like a +ve gear property. I would have used a discretionary trust if it is.
Your questions also centre upon revenue flows and the consequential taxation implications which you should check with a tax expert. I am not an accountant but believe you can stream income as Redwing states.
CATA
Asset Protection Specialist
[email protected]
coastymike
Participant
@coastymike
Join Date: 2005
Post Count: 125
October 28, 2005 - 10:50 pm
Be careful with streaming to other beneficiaries were an individual has been issued with special income units.
If the special income units were issued to fund the acquisition of property and none have been redeemed you could loose interest deductibility if you stream to another person without special income units. Refer Munro V FCT and Part IVA of the ITAA 1997.