Hi Benm84

Yes you can lend money back from a company to the trust but like I said earlier there will be consequences in doing so.

Your best bet is going to your accountant with this situation and specifically ask him what are the Div7a and Subdivision EA consequences of lending distributions from the trust to the company back to the trust.

You will receive a positive tax benefit by distributing to the company only if your current income levels including the distribution to the company exceeds the 30% threshold.
If it is under or the same then personally I can't see the benefit of distributing to the company. Some of the others may be able to point out advantages.

In terms of the PPOR being held in a trust I hav eonly read in other threads that as long as you're not trying to claim the FHOG you can claim a property as a PPOR regardless where it's being held – don't quote me on this one though, as I have never dealth with this certain situation before.

Hope that helps

Best of luck

Scab

Hi Banker

Yes this was the case previously.

However in the eyes of the ATO, a Trust which has distributed money to a Company but the money maintains in the Trust is seen as a Unpaid Beneficiary Entitlement. Previously, this would have only caused an issue if a beneficiary other than the company (say an individual) owed money to the Trust – this would result in a Div7a Loan.

They are cracking down hard on this, and now loans of the sort between Trusts and Companies are going to cause the same issue, albeit not under Div7a. Note this hasn't been implemented yet.

If I recall correctly though, you might be able to get away with it, if you specifically make a bank account in the trust and keep those funds which the company has 'lent back to you' completely seperate. You must ensure the funds are not mingled with other moneys.

Either way it's becoming harder and harder to pull money out tax free, unfortunately this is having consequences to people who are genuinly reinvesting the money.

Hi I can't help you from the investment numbers side since I am quite green too but from the tax/accounting side.

Settlement for the purchase of land is day 1 since the land is the asset and building on it you are not creating a new asset but rather adding to an existing one.

Holding the asset for 12 months or more gives you a 50% CGT discount, that is the max discount you will get, holding it for any longer will not increase this.

Hope that helps.

Scab

Another poster 'shoutfromtherooftops' or something along those lines was posting some abuse and I think 'meh' was his reply, after that the post got deleted, pretty sure it wasn't aimed at the people giving advice.

Cheers

Scab

Don't forget though if you enter a contract with a option to buy in 8 years for well below market – fair enough the parents will not need to pay any CGT due to the arms length transaction vs market value rull.

But you've technically made a gain on excercising your option, the gain being the difference between the price you pay and the market value of the asset. You will be subject to tax on that difference.

I did not know once you retire you can sell assets CGT free – from the sounds of it, you've done the research and have determined that retirees can do this.

If this is the case if your friend keeps those payments up but put it as 'rent' on paper and buys the property for $275,000.00 in 8 years time, it would be CGT free.

 However, if this is not the case and retirees cannot sell assets CGT free then your friend purchasing the property at well below market in 8 years time will count as a 'non arms length' transaction in which case the market value of the property will be used as the capital proceeds from sale when calculating your friends step parents capital gain.