Forums / Getting Technical / Finance / Be VERY careful who you listen to for advice on structuring/tax.

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  • Profile photo of Solomon10Solomon10
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    @solomon10
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    More for the newer investors, i thought i would share an experience i had today with one of the bigger banks. I had the Branch Manager/lender offering me tax and financial advice,if that wasn’t bad enough,also that advice was completely incorrect. I was advised that if i redrew up to 80% of my PPOR,then used it to do what ever i chose to do with the money,it would then be deductible when i turned the PPOR into an IP. I advised him this was incorrect and a lengthy discussion ensued,becoming quite heated. Long story short i’m sure there are plenty out there who would trust such a person,and end up in a lot of potential trouble with the ATO,with claiming deductions that they shouldn’t,and having a shocking structure set up. Beware who you listen to for advice. Has anyone had an experience like this or been burnt by bad advice?

    Profile photo of BennyBenny
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    Hi Solomon,
    Wow, from a Branch Manager that is pretty much unforgiveable !! One might expect such “advice” from an over-zealous new hire, but surely a Manager should have known better.

    Thanks for sharing the story – for sure, it puts a red flag up for all. And I agree the large majority would have no idea that they were being misled.

    Re similar bad advice, the worst that has happened to me was that an Accountant whom I trusted sold me on the idea of using a Hybrid Trust to purchase a property. That has turned out to be the biggest sink-hole for cash and I now wish I had simply bought in my own name.

    There are supposed benefits with a Trust, but here are some of the unanticipated troubles associated with it :-
    1. Land Tax (Qld) is 10x what it would have cost if held in person – $100+ per week today (instead of $10 per week).
    2. Difficulty getting finance – not so many lenders would look at it when purchasing in Hybrid Trust (that may have changed now – purchase was in 2004). It didn’t start out that bad, but changes to laws have contributed to the massive difference I see now.
    3. Extra Auditing/Accounting fees per annum to comply with stricter rules.
    4. Rules seem to change from time to time, making the existing Trust “non-compliant” and requiring $$ spent to bring it right again.
    5. Asic fees – $212 per year – but DON’T ever be late in paying THESE. It quickly doubles and more if an oversight has you not pay them on time.

    Not something I will be repeating in a hurry, for sure….

    Benny

    Profile photo of Jamie MooreJamie Moore
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    Hi Solomon

    Yep – it’s scary how incorrect the advice can be….and also how common this is.

    I’m always tidying up structures that bankers have made a massive mess off.

    It’s great that you were clued up enough to identify the issue.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of PLCPLC
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    Wow, if that is the advice the branch manager is giving, then I dare say he won’t be branch manager long.

    Though I’m not surprised as bad advice like that is prevalent from both banking staff and/or brokers. Just need to weed the bad ones out when looking for a good one.

    Good to hear you set them straight Solomon.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
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    Profile photo of Colin RiceColin Rice
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    Not surprised at all and also wont be surprised if the ATO are preparing to launch a full scale assault on IP loans as the majority will be set up incorrectly.

    I have given specific advice to clients to then have the teller or loans officer attempt to undermine it. I tell my clients to call me whilst in the branch and put me on the perpetrator to advise accordingly, lol.

    I could share some doosies that would make your head spin with advise that has been given to clients. the people delivering it are either extremely ignorant and dangerous or deliberately undermining my advice!

    • This reply was modified 5 years ago by Profile photo of Colin Rice Colin Rice.
    • This reply was modified 5 years ago by Profile photo of Colin Rice Colin Rice.

    Colin Rice | CDR Finance
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    Profile photo of Solomon10Solomon10
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    I won’t be surprised either Colin. I read the other day that the ATO was going to run head on against developers playing with using cgt within trust structures and not declaring profits as income,logical next step to me would be interest only loans and assessing if they are fit for purpose as deductible expenses.

    Profile photo of vagirl2012vagirl2012
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    That’s just incredible. How can a supposed finance “professional” give such ridiculous advice?

    Profile photo of Solomon10Solomon10
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    @solomon10
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    I think a lot of these “professionals” do not know the laws and codes they are bound by,nor the limited scope of their own profession. As always,it is a case of buyer beware,and choose the teams around you carefully.

    Profile photo of Richard TaylorRichard Taylor
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    Hate to say it is so common it is not funny.

    The big Banks at the moment are so focused on trying to get you to lock in your loan on a long term fixed rate that correct advice is secondary.

    Retention departments have been told to work on locking in clients so they can’t get away the longer the better.

    Sad reflection on the industry at the moment that as usual profit comes ahead of customer requirements.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
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    Profile photo of TerrywTerryw
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    When getting advice like this try to get it in writing so you can later use this as evidence for suing the bastards later.

    Benny, you could make a claim against that accountant pretty easy..

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
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    Profile photo of CanberraClaireCanberraClaire
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    I guess at the end of the day, they’re passing their opinion off as fact. Dangerous, yes. Outside their scope, certainly.
    Couldn’t agree with you more about who to listen to, but so many accountants are narrowly trained that unless they’re heavily investing themselves, I wouldn’t go near them for structuring advice either!

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    Profile photo of Colin RiceColin Rice
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    I guess at the end of the day, they’re passing their opinion off as fact. Dangerous, yes. Outside their scope, certainly.
    Couldn’t agree with you more about who to listen to, but so many accountants are narrowly trained that unless they’re heavily investing themselves, I wouldn’t go near them for structuring advice either!

    I work with accountants that are property investors and I know more about structuring finance than they do yet legally limited on how deep the advice gets never mind the average bean counter who often gives the exact opposite advice that is required.

    And when I say “run this past your accountant before proceeding” I cringe with tongue in cheek.

    • This reply was modified 5 years ago by Profile photo of Colin Rice Colin Rice.

    Colin Rice | CDR Finance
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    Profile photo of Jamie MooreJamie Moore
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    I work with accountants that are property investors and I know more about structuring finance than they do yet legally limited on how deep the advice gets never mind the average bean counter who often gives the exact opposite advice that is required.

    I know! It’s a frustrating situation.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of TerrywTerryw
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    <div class=”d4p-bbt-quote-title”>CanberraClaire wrote:</div>
    I guess at the end of the day, they’re passing their opinion off as fact. Dangerous, yes. Outside their scope, certainly.
    Couldn’t agree with you more about who to listen to, but so many accountants are narrowly trained that unless they’re heavily investing themselves, I wouldn’t go near them for structuring advice either!

    I work with accountants that are property investors and I know more about structuring finance than they do yet legally limited on how deep the advice gets never mind the average bean counter who often gives the exact opposite advice that is required.

    And when I say “run this past your accountant before proceeding” I cringe with tongue in cheek.

    At least they can blame the accountant when things go wrong. however I think with most things are going wrong, but they don’t realise it and won’t realise it until they change accountants or get audited.
    And went I say blame the accountant I mean the person signing the tax return is still reponsible but they may be able to sue the accountant (like Aussie John – suing tax lawyers) if they give wrong advice which results is the tax payer losing money

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
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    Profile photo of Colin RiceColin Rice
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    How likely is a client to get audited by the tax department in your experience Terry and does reason apply to the audit?

    • This reply was modified 5 years ago by Profile photo of Colin Rice Colin Rice.
    • This reply was modified 5 years ago by Profile photo of Colin Rice Colin Rice.

    Colin Rice | CDR Finance
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    Profile photo of TerrywTerryw
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    Very rare Colin.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
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    Profile photo of Solomon10Solomon10
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    Terry, is it rarely that a client will be audited? Or rarely that reason is applied to said audit?

    Profile photo of TerrywTerryw
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    its rare to be audited.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
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    Profile photo of Solomon10Solomon10
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