Are these a good idea? I've been dealing with a company that sets up everything from loan application to buying an ip. They set up the ip loan so that nothing gets paid on it while all income including the rent on ip goes onto the principle place of residence – so that it gets paid off quickly. I understand that ATO is ok with these setups now but notso in the past – and I guess could change their rules at anytime. I understand the benefits of this kind of setup with good debt/bad debt and tax implications but I don't know if I like the idea of the ip loan just getting bigger and bigger for who knows how long.
I would be very careful. Have a read of the Hart's case which involved this sort of thing. The High Court ruled the participated in a 'scheme' with the dominant purpose to minimise tax. There were a number of reasons for this, but one was that the loan product was marketed this way.
I think it may still be possible to do something very similar, but you need to be very careful that it is not seen as a scheme.
Terryw | 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
its best to get a private ruling – i applied for one and was approved it may take a few months but at least you know your safe
Thanks for that. The company we've been talking to seem to setup a lot of them so I'm assuming (fingers crossed) they do it right to keep the ATO happy
That is a big, and possibly costly, assumption to make!
Terryw | 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
And does there work come with a Guarantee that their structure is ATO compliant.
Personally I would never take the word of a marketing organisation trying to sell me a property package for something as important as this.
Richard Taylor | Australia's leading private lender
Qlds007 wrote:And does there work come with a Guarantee that their structure is ATO compliant.Personally I would never take the word of a marketing organisation trying to sell me a property package for something as important as this.
No, haven't seen a guarantee but will be asking now – thanks for that.
Even if there is a guarantee it would be virtually worthless. If you have to sue and the company has no assets………….
Terryw | 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
The product sound dodgy. Agree with jazamite. You should get private ruling. But from the sound of the product you explain, I beleived it's hard to pass the ruling.
Can you please post in which company you are referring to that setting up this kind of product?
nareenoi wrote:Can you please post in which company you are referring to that setting up this kind of product?
Canterbury Property Services. Anyone know anything about them?
Have discovered more about this company. They expect you to apply for a loan with them as introducers, and then buy a house they pick out which you haven't even seen (is it a good buy or not ??) and apparently just sign on the bottom line and believe in these strangers without asking any questions. I'm not recommending them….
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