A Unit Trust could POSSIBLY get you the interest deduction, but the problem with this is the income from the trust is paid to the unit holders in proportion to their unit holdings. If you own all the units, to get the interest deduction, you also get all the income. I'd look at a discretionary trust. As Richard says, at the moment interest rates…[Read more]

PosEnterprises wrote:
So why do Accountants keep saying that HDT's are a better way to invest if you intend on building a portfolio.

 Now that the ATO have made their feelings known, I don't know of any accountant that would recommend a Hybrid Trust arrangement.

Yes you can backdate the date of registration for GST.

Firstly, the ATO are looking at the deductibility of interest for hybrid trusts. This taxpayer alert was released recently, citing the ATO's concern with the deductibility of interest in this area. For depreciation, if the trust owns the IP, then any deductions for depreciation remain with the trust. i would be very wary about setting up this type…[Read more]

You can apply for an ABN without registering for GST. When you think your business income – including commercial rent – is over $75,000, you will then need to register for GST. This will save putting in the nil BAS returns.

There can be CGT liability even if the investment property was a previous PPOR, if they are currently claiming the main residence exemption for another property. The six year rule is only valid if there is no other property where main residence exemption is being claimed.

Tax is like swings and roundabouts; what you get in one area, they take back in another. I would say you would be up for stamp duty on the transfer of the investment property title, and your wife could be up for capital gains tax on her share of the investment property. Another way you could do it is get divorced, as CGT on property settlements in…[Read more]

K, this case is different, because it mentions in the article that this loan was a variable interest loan, and RHG had raised the rates. They couldn't have done this if it was a fixed rate loan. Ms Hamilton was keen to refinance to a more-competitive loan after RHG increased her variable interest rate well above Reserve Bank of Australia (RBA)…[Read more]

If you decide on loaning the money to the trust, get a loan agreement drawn up. It will be relatively inexpensive, and shows the ATO that the loan is legitimate. I wouldn't gift the money to a relative; this could end in tears. For $50k, the interest you would earn would be $4k at 8% for a full year, so it's definitely not worth the hassle, or t…[Read more]

I don't think it's time to store the tinned baked beans just yet.There are so many factors to consider when trying to predict the economic future. No-one knows what will happen, and the range of predictions from trained economists shows that they don't know either. What we do know is the Australian system of borrowing for real estate is vastly…[Read more]

It sounds like a pyramid scheme, pure and simple, but good luck with that 'personal growth', FarmBoss.  You could develop some personal growth by volunteering at a nursing home, or helping old ladies cross the street, rather than flogging overpriced merchandise to your mates. Thanks for the 'clarifications', but I think I'll steer clear a…

The test for deductibility of interest is what are the funds used for. If you have a $150,000 loan, put $30,000 into it, then redraw that $30,000 for your IP deposit, only the interest on the $30,000 is deductible (or 20% of the interest).After you sell, I believe there would be no interest deduction, as there is no asset, or income, to deduct the…[Read more]

Timing the settlement means that you would have settlement date as close to the end of the quarter as possible (end of March, June, September or December) so you can then lodge your BAS for that quarter, and claim your refund as soon as possible. If you are lodging BAS's quarterly, and you settle at the end of January, you woiuld have to wait at…[Read more]

I'm not sure why you would want to do it, but you can, in limited circumstances, borrow by using instalment warrants to purchase an asset for your SMSF. The borrowing has to be non-recourse, so the amount you could borrow would be limited. This change is faily new, and could be a potential minefield. Have a look at this Q&A from the ATO. Make s…[Read more]

For tax purposes, a trust is the way to go, as any Capital Gains, after 12 months, will be taxed in the hands of the beneficiary at a maximum of 23.25%, compared to 30% in the company. If you are concerned about asset protection, you could set up a trust with a company as the trustee. Before setting anything up, best to see your accountant, as…[Read more]

The young ones vote it down because of the perception that the CA's have to work harder to get their designation, compared to the CPA's. That was certainly true in the past, but the CPA's have caught up. From people in the know, the CPA designation is easier to attain. CA Program takes about 2 1/2 years to finish.Your salary will definitely be…[Read more]

My advice is get professional advice, do not rely on a real estate agent for tax advice. Your first step is to determine whether the purchase is a taxable supply, or what portion is a taxable supply, because of the split use. Also, determine if the seller is using the margin scheme. If he/she is, you won't be able to claim any input tax credits on…[Read more]

On a personal level, this is pretty much true, but we are yet to see the effects of the global slowdown. Unemployment will rise, growth will slow and Australians as a whole will be worse off. On the micro level, some people will lose their jobs, which could be devastating for them, some will not be able to afford the repayments on their house. For…[Read more]