All Topics / Help Needed! / Company as Trustee?

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  • Profile photo of delboydelboy
    Member
    @delboy
    Join Date: 2003
    Post Count: 80
    March 15, 2004 - 11:25 am

    Hi All

    I have been doing as much homework as I possibly can on setting up trusts and companies without actually going to see an accountant/lawyer, as I am trying to get a full understanding of it all before I start paying the dollars to set it up.

    I understand the reasoning behind setting it up with a company as trustee and you as directors of the company etc.

    However, when it comes to purchasing a property and where the moneys come from and go to I am a little confused.

    You get a loan in the name of the company.

    You purchase the property in the name of the trust.

    You rent out the property and get +cashflow.

    Does this cash go back into the trust or the company?

    If it goes into the trust, then how can you run a company with no money coming in?

    If it goes to the company this means it gets taxed at 30% then taxed again when distributed to the beneficiaries, is this true?

    Any help would be much appreciated.

    Regards

    Derek

    Profile photo of woodsmanwoodsman
    Member
    @woodsman
    Join Date: 2004
    Post Count: 714
    March 15, 2004 - 12:22 pm

    Delboy,
    No expert but hopefully I can answer some of your questions.

    The bank lends the money to the trust, but will ask you (if the trustee is a company, then the directors) to guarantee.

    Sometimes, banks will only put the name of the trustee on loan documents or bank accounts

    Any income goes back into the trust. If you don’t distribute the income to the benficiaries, you pay 48.5% tax. Therefore, it is common to distribute the income to the beneficiaries to minimise tax payments (in the case of a family trust).

    If the trustee is a company, there is no requirement for it to maintain a certain level of business. Ultimately, you as director will guarantee the due performance of the loans of the trust. There will be an annual and accounting fees for maintenance, however, if you are planning to buy multiple properties in the future, in addition to the tax benefits, deductions , this will be worth it.

    Hope this has answered some of your questions.

    James

    Profile photo of delboydelboy
    Member
    @delboy
    Join Date: 2003
    Post Count: 80
    March 16, 2004 - 10:45 am

    James

    Aaahhh (sigh of relief)

    Thanks for your reply. That makes a bit more sense. So the only reason for the company as trustee is as a protection buffer.

    The plan is to purchase 130 in 3 1/2 years. I heard someone else has done it before, ha ha.

    Thanks again, much appreciated

    Derek

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429
    March 16, 2004 - 12:04 pm

    Derek

    Check out Trust Magic and Tax Battles by Dale Gatherum Goss. Also visit http://www.somersoft.com.au Forums.

    http://www.gatherumgoss.com

    Cheers
    Mel

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435
    March 17, 2004 - 2:18 am

    Trust and Company Structure:

    http://www.chrisbatten.com.au

    Kind regards

    Chan Dollars
    [Retire Young, Retire Rich] [strum]

    Profile photo of delboydelboy
    Member
    @delboy
    Join Date: 2003
    Post Count: 80
    March 18, 2004 - 12:47 am

    thanks guys

    I checked out those websites and they were a great help.

    I think I am now ready to find an accountant and lawyer to set things up.

    Cheers[cap]

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