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  • Profile photo of bb8bb8
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    @bb8
    Join Date: 2009
    Post Count: 30
    July 19, 2010 - 9:27 am

    Thanks Terryw for your advice.

    However if I am the director of the separate company and earning income that way or just as a contractor with an ABN, wouldn’t diverting my income into the trust with the losses thereby reducing my taxable income, be considered “dodging tax” – esp when all the directors/appointers etc for the trust and companies are the same people. Do you need to justify why you want to divert money into a family trust from an unassociated company or even as a self employed contractor?

    Thank you, bb8

    Profile photo of bb8bb8
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    @bb8
    Join Date: 2009
    Post Count: 30
    July 19, 2010 - 6:31 am
    Terryw wrote:
    Well, its still difficult to decide because:
    – If you use a trust any losses cannot offset your personal incomes. If you add up depreciation expenses, travel expenses then there could be a large loss. maybe $10,000 pa. If in your personal name then you could tax maybe $3,000 in tax. Not so in a trust, unless you are self employed maybe.

    – You may have to pay more land tax in Vic if you hold in a trust. I am not sure of the current rules down there.

    On the positives, if you have kids, each kid can get approx $3,300 pa in unearned income each year and not pay tax. So if the parents were both working and the property earned $6,000 after expenses then no tax may be payable. If it was owned in personal names then maybe $2500 in tax would have been payable.

    But if you don't have kids and are both working and all your near family are working then you may have no one to distribute to so would pay tax just as if you owned it in your own names – or maybe you could cap the tax at 30% by distributing to a company.

    Long term trusts will be great, but it can be painful in the early years, especially with the losses and land tax.

    Hi Terry
    I am in a very similar situation to the once described.  I'm confused by your comment above "Not so in a trust, unless you are self employed maybe." on how I can offset losses in a family trust as I am self employed.  How does being self employed allow one to offest losses from a family trust?

    My husband is a salaried employee and my work is flexible in that I can choose to be paid on payroll or via ABN.  I do have significant litigation risk and that's why I was advised to buy our investment property under a family trust, and set up a company to act as trustees.  It was also suggested that instead of being paid by ABN/payroll, that  I set up a second company (let's call B) to bill for my work (with ACN instead of ABN) which will offer more protection?  I'm not sure which set up is most advantageous from a tax perspective and also what the banks prefer before lending us money.

    Thanks in advance for any advice!

    bb8

    Profile photo of bb8bb8
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    @bb8
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    Post Count: 30
    May 13, 2009 - 3:12 pm

    Thanks v8ghia. After posting and signing the documents the following weekend while reading magazines at a dental appointment came across an article discussing loan contracts. I think the term was unilateral variable clause ? – basically allows lenders to change anything just like you’ve confirmed!

    Profile photo of bb8bb8
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    @bb8
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    Post Count: 30
    May 13, 2009 - 3:06 pm

    Recently got my loan, it took us 10 working days, was nerve wrecking though, and would not recommend leaving things so late. In case paperwork not completed properly etc. The valuation took 2 days. Good luck with your application!

    Profile photo of bb8bb8
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    @bb8
    Join Date: 2009
    Post Count: 30
    May 7, 2009 - 12:14 pm

    thanks rudra and richard

    so does that mean.. if say for example in 2 year’s time NAB’s package discount margin goes from 0.5% to 0.4% then we all have to follow suit, based on that clause that they can change the interest rate including any margin?

    i take it that “margin” in this case refers to the discount margin?

    if so, then when they say you will get “0.7%” off for the life of the loan, it really means they can change that whenever they want without our consent?

    thanks again!

    Profile photo of bb8bb8
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    @bb8
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    April 22, 2009 - 6:00 am

    Dear Qlds007 and v8ghia

    Thank you very much for all the advice.  Perhaps with the recent interest rates changes the banks have been a little more lenient with their offers – though I have no idea why… I have received offers of 0.8% discount of SVR from the banks with the exception of CBA – who we haven't approached actually – which from your posts seemed to have tightened up with their lending discounts – also noting their fixed rates are now higher.  Westpac with their pro package also offer the 0.2% off fixed rates which is an advantage.  Pity there is no historical comparison of SVR's of the 4 banks for 2008 to work out which banks have generally stayed the lowest with the SVR.  I only found Nov/Dec 2008 rates in Cannex.

    Thanks again!

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