cleardocs discretionary trust Vs a HDT trust

A discretionary trust is one which allows the trustee discretion to distribute income and capital gains to a wide class of beneficiaries.

A hybrid is, usually, a discretionary trust which has the ability to issue units. Usually the high income earner borrows to buy the units and claims the interest on this loan against their personal income. In return for this (to justify the deduction) all the trust income must go to the unit holder. Later on the unit holder can sell their units to the trust and it can then function as a discretionary trust.

The ATO is looking into hybrids now, and there are certain deeds out there that are no good and will not allow the interest claims to be substanitated. So I would suggest you not buy a Hybrid trust deed over the internet without some professional advice.