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TerryW is now working with House of Wealth who have opened a Sydney office. Those prices are crazy.
SMSF with one property and assuming it has borrowings and therefore a warrant trust no more than $3,300 including audit
Unit Trust about right
DT with one property no more than $1,320 including GST
Company with one property no more than $1,320 including GST
individuals about right
I'd chat with TerryW and Martin Wilson at HOW. There number is 1300 481 280.
Your current accountant is too expensive.
jelovea
I haven't had any experience with Carly Crutchfield but my experience with a lot of these seminar hosts is that in practice it is extremely difficult to implement their strategies. Now the next thing you will be saying is "<moderator: delete language> so you are telling me I wasted $6k" well no. i'm sure you've learnt a lot from the course and from others and that is what is worth taking away from it.
Personally I think there will be some great opportunities in the next 12 months for property. Things are starting to stagnate or drop and as they do people get nervous. Look around at some of the cheaper areas (not sure where you live) but here in Sydney in the Western Suburbs there are some good deals. Things that need a little work or some minor renovation work but once done are positively geared or close to it. Good way to build up a portfolio without the stress of too much gearing.
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Do hang in there. I wasted about $25k about a year ago on a dud venture but the things I learnt from it really helped with another venture which has been profitable. So you live and learn.
I just reread the post and saw the comment "no stamp duty if transfer to SMSF". In NSW this is not the case at all. The transfer would be a dutiable transaction and would be subject to stamp duty. Barca no disrespect but it is obvious you have a little knowledge but as they say a little knowledge can be dangerous.
The advice you have given is technically inaccurate and unfortunately many people read these forums. If you don't really know the answer you are better not to comment or refer them to someone who has the knowledge. Our accounting practice is generating a lot of income from answering questions where the advice has been given over the internet and it is incomplete or inaccurate. When you show the client sections of the act, cases and supporting ATO decisions they realise the complexities of tax law. Unfortunately a bill also comes with the advice.
I don't think it is picking holes because if you were to transfer the residential property then not only would you have a CGT event which you would need to pay tax on you would also have a non complying fund which would either need to rectify the situation or risk being taxed at 45% on the value of the funds assets.
A superannuation fund fits into the general definition of a trust. Assets are held in the fund for the future benefit of the named recipients of the fund. However, members of a superannuation fund do not have the same rights of entitlement as beneficiaries in a trust generally do.
The reason for that distinction is that members of a superannuation fund have a right to receive benefits from the fund but are not absolutely entitled to the assets themselves. Once they place assets into the fund (whether by sale or an in specie transfer) they give up their claim to those assets until the fund ceases to function.
The transferring of assets to a trust is a CGT event (E2) and CGT will be payable on the in-specie transfer. This is explained in Section 104-60 of the ITAA 1997 which deals with transfers of assets to trusts. http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s104.60.html and also on the ATO website http://www.ato.gov.au/super/content.asp?doc=/content/00094524.htm&page=1#P38_2180 which states "The transfer of an asset ‘in-specie’ is a CGT event as the transfer is a disposal. You may make a capital gain or loss from the CGT event according to the usual CGT provisions that apply to that asset."
You would be prohibited from transferring your residential property to an SMSF. This is confirmed by the ATO in the above link and which states "You cannot transfer a residential investment property to your SMSF. It is not covered by the above exceptions." It is to do with the fact you are a Part 8 associate holding residential property. This does not apply to commercial properties but CGT is still payable whether it is an in-specie transfer or a sale.
With unit trusts you need to be aware of CGT Event E4 and the impact on the small business tax concessions. With companies you need to consider Section 47 with respect to distribution by liquidators and Section 43 with respect to distributions from the company when analysing the impact of the small business tax concessions.
Selling the shares or units may give a different result but you need to consider both the 80% test (with respect to an active asset) and the 90% test for determining whether there is a significant individual.
Also need to consider CGT Event C2 when winding up the trust or company when considering the concessions.
Agree that you need to consider whether the company will hold appreciating assets, apart from goodwill, and the impact of the 50% CGT discount. It may be advisable to hold appreciating assets such as property in a different structure for these reasons.
An advisor can work through these issues with you.
Richard,
Yes Justin Frohnert summarised it well. http://www.superliving.com.au/StoryView.asp?StoryID=122512
Just to clarify Section 67(4A) of the SIS Act which covers the new legislation states at subsection (ii)
"(ii) is not an asset the RSF trustee is prohibited by this Act or any other law from acquiring;
is held on trust so that the RSF trustee acquires a beneficial interest in the original asset or the replacement"
Therefore it is critical under the new rules than a separate trust, now being referred to in professional circles as a debt instalment trust or debt investment tust must acquire and hold the asset whilst the borrowing is in place.
The super fund cannot hold the asset and gear in its own right under the new rules in Section 67(4A)
Time for me to do as many have done before and keep my knowledge to the Somersoft crew. Once someone starts attacking people in the profession I say goodbye. Good luck.
Lisa,
I am curious as to what strategies, mentioned by Dale in his book Trust Magic, in your opinion are bordering on tax avoidance with specific reference to relevant legislation and High Court cases.
You state “but I would advise anyone who has read this book not to take his advice on board”. Which advice specifically ? The advice on the use of hybrid trusts ? I have a private ruling from the ATO which confirms that the strategy adopted by Dale and many of us in the accounting profession is allowed.
Can you please indicate which aspects you object to and provide reference to legislation and High Court cases as to why you object.
Brenda it depends on when the asset was purchased. The sale of your rental property will include depreciating assets and a balancing adjustment will happen to those assets.
You work out the balancing adjustment by comparing the assets termination value (that is, the proceeds from the sale of the asset) and its adjustable value at the time of the balancing adjustment event. If the termination value is greater than the adjustable value, you include the excess in your assessable income. If the termination value is less than the adjustable value, you can deduct the difference.
You will be required to use the apportioned capital proceeds between the property and the depreciating assets to determine the separate tax consequences for them.
However any assessable balancing adjustment amount or capital gain may be reduced if a balancing adjustment event occurs to :
– an item that was acquired before 11:45AM on 21 September 1999 or ;
– a depreciating asset acquired before 1 July 2001 that is not plant.The amount of the reduction is the cost base of the asset for capital gains tax purposes less its cost.
Misty,
There are provisions in the Act that discuss this scenario and the main residence exemption. Discuss with your accountant.
How boring life would be if we always stayed on topic. Ohh sorry this is off topic.
These changes were announced in the budget and therefore come into effect from 1 July like all other changes to tax rates.
A company who has an in-house childcare centre can provide childcare to employees and these will be classified as exempt fringe benefits provided the criteria is met.
Given that you are using gross dollars to pay for the benefit and they are exempt benefits then it is a tremendous advantage who don’t. Usually only appropriate for medium to large companies who can afford to establish an in-house childcare centre.
Terry,
I’m at the stage now where I don’t try to convince anyone anymore. I simply put forward the facts and let them decide. Strangely enough all of my high net worth clients (client worth over $5M in my opinion) all operate through a variety of trust structures for a variety of reasons.
If you don’t think trusts are useful then don’t use one. Noone is forcing anyone to use them.
The only caveat (no pun intended) I would apply is to seek legal advice. None of the people posting, including me, in relation to this message has, in my opinion, legal qualifications nor are we practising solicitors or barristers.
Terry,
Very appropriate advice. I was reading an article the other weekend and it was discussing a company that provided contracting services to major companies and overextended themselves and eventually went into liquidation with massive unpaid PAYG tax liabilities.
One of the employees had been working for 13 months with the company when they asked him to become a director. Well guess who is now being chased by the ATO for these substantial debts. The director.
Very apt.
Wake,
You would need a lot more facts to make a decision. Best to discuss with an accountant who has an indepth knowledge of GST.
As a starting point they should consider Miscellaneous Taxation Ruling MT 2000/1 and Goods and Services Tax Determination GSTD 2000/8.
Ordinarily I wouldn’t make a comment but making such a derogative comment towards someone (calling them a moron) deserves a comment.
Your comments are like the pot calling the kettle black. Hardly appropriate to make such comments when you yourself misspelt seriouls y (sic) and wouldnt includes an apostrophe.
I think Dale was using his own sense of humour when discussing sex toys. I am curious as to what sections you think are inaccurate.
Cata,
It wasn’t directed at you. In general I have found your advice to be good and refreshing.
I had a very heated discussion with an inexperienced accountant about the very issue on Friday and until I had a partner from one of the large law firms in Sydney ring that accountant to advise them I was in fact correct and if continued allegations were made we would consider legal options (the accountant was trying show to my client that I didn’t know what I was talking about and move over to them). So my nerves are a little raw at the moment about the issue.
Sorry if you felt it was directed specifically at you.
It is very important that people who operate through trust structures understand the notion of the trustees right to be indemnified against the assets of the trust. This is an important part of every state’s law and basically holds the premise that where the trustee is sued and is found to be liable then that trustee has the right, and the obligation, to sell the trusts assets.
So if you have an investment property in a trust with a $2 paid up share capital company as trustee and the tenant successfully sues the trustee, the the trustee will have to sell the investment property to pay the legal obligations.
The concept that only the $2 company is sued is negligent advice and neglects the trustees right to be indemnified from the assets of the trust. I wish people would get this concept right.
