Forum Replies Created
- Originally posted by carolinehale:
My husband is a high earning corporate and it is also financially comfortable for us. But I cant see our accounts, have no income or power and that is my point. The right to go it alone.
Yes, I got that bit from your first post. I assume you both/he owns his own company and company premises, thus the company overdraft and the commercial morgage over your house.? Very glad to hear that you are financially comfortable though the penalty for that is that your husband is very busy and jets off at a moments notice.
The bit about having 4 children under 5 and not having access to your accounts is new though. Phew! I hope you have help at home.
I assume the bills are taken care of by either the company accountant or the secretary.? Knew and hated that one. You feel such a mushroom.
It sounds to me as if you feel (and in reality may be) left out of everything outside the house and kids. Does you husband realise this? Have you seriously sat him down and talked to him about this? Maybe he thinks you prefer not having to worry about the business. That he is doing “his job” by being a good provider and leaving you to “do yours” at home. Yes, very old fashion but maybe he learned it at home.
Though investing is fun and can be profiable, done right, I’m not sure that this is your main problem. It may be a solution to the question of – what can I do to feel satisfaction while still being a good stay at home Mum – but still maybe not your main problem.
Being left out of everything else, having no control, not being part of the decision making process …… not being part of a team, may be.
Organise some quiet time and talk to him.
Sorry for the Dorathy Dix post. [blush2]
Good luck
ElkaHello MArk
I believe that if you buy IPs under your names first and then move them into a trust later you will be up for both sales tax and CGT. Not great.
Cheers
ElkaHello All
I think we may be getting into trouble here because we are talking apples and potatoes without some of us realising it.
I believe we are mixing up tax rates (or tax brackets) and effective tax rates.
Kel Fitzalen from Deloitte clearly states that on about $150K the effective tax rate will be the same as the 30% company tax.
That’s true.
Even though all the dollares over $75K attract the 40% tax rate, given that the dollars under $25K are either tax free or taxed at 15%, the effective tax rate is around 30%.
If my calculations are correct an individual will pay $47,850 in tax on $150K while a company with this income will pay the flat 30% which is $45K.
But it’s also true that by splitting this $150K across two people you can both keep the top rate paid on any dollar down to 30% and reduce your effective tax rate down to 23%.
Naturally you could simply have a partnership between the 2 people but a trust gives you so much more flexibility. You (as the trustee) can decide how to distribute the income each year anew . Your cirumstances don’t remain stable over 30 – 40 years.
Actually, with Johns DT and his hypothetical $200K, split 2 ways, (forgetting the kids for the moment) his effective tax rate will be 27.89%. By allocating some of the income (book entry and legal) to other family members (depending on the trust deed) he could even limit the tax rate paid on any dollar to 30%.
hb don’t knock the $700 (it may be more now?) for the kids. It may not save you much tax in 1 year but it sure is a nice way to build a pre tax dollar nest egg for your kids. You could of cause just give them the same amount when they turn 18 (700 X 18 = $12,600)but you may have had to earn $31,500 to do it.
Also over 18 you can allocate your kids as much income as you want from the trust. You will need to give them money to study etc. anyway so why not give it to them tax free or at a very low rate. Why give it to them after you’ve finished paying the tax man 40 cents (or even 30 cents) on the dollar.
Clearly trusts have their purpose only one of which is tax minimisation.
I hope this helps cool the air [upsidedown]
Cheers Elka
Hello Steven
Did you say that IO loans are stock standard for non deductable loans e.g buying your PPOR? I’m confused. I would have thought that that was one debt that you would try to reduce for that very reason. Can you explain further please.
Thanks
ElkaHello Lisa
Your welcome. I have since worked out how to delete my posts but simply forgot about it. Now I’m glad I did. [smiling]
Cheers
ElkaOriginally posted by YoungInvestor:So then can you distribute the income of the company to yourself as a franked dividend assuming the company has already paid tax on that income?
“Good question but even if you can, what have you gained? You will still need to pay the difference between the 30% company rate and your 42 % rate. ….. unless you live overseas ……in which case you will have different problems depending on your country of residence.
I guess the company lending it to you or to your trust is the best option? The interest you pay it then attracts 30% tax and if your maths is good then you make sure that you deduct it as an expense at the 42% rate. ?
I’m still scratching my head here. It seems to me that eventually you will have to pay full tax if you ever want to spend any of it? [glum]
Does any one know if this stuff is fully explained in “bib and bub” terms in either wealth guardian or Trust magic?
Thanks
ElkaHi all
Excuse my ignorance in this area but what happens next?. I mean you distribute some of the income to a company but then how do you actually get to use the money.
Can you get it out of the company somehow or is it necessary that your next investment be bought by the company?
Hope this doen’t sound too stupid. [confused2]
Elka
Hello Anita
I believe he hasn’t approached him yet but I’m still working on it.
Can you give me the names of a couple of these lenders please.
Thanks in advance
ElkaHello Peejay
Up to six years in one stretch.
Here is the link to the ATO where it’s explained.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm
Cheers
ElkaGood to know. Thanks Terry.
Elkam
Hello Snowflake
I thought I’d rephrase this for you as from your last post I wasn’t sure that you really understood about repairs v improvements.
They are BOTH deductable. You can claim both of them.
The difference is how they get to be deducted.Repairs are deducted in the one year while improvemnts are depreciated … or put another way … are deducted bit by bit over a number of years. That’s not necassarily a disadvantage.
Hope this helps [smiling]
ElkaHello Pen
I believe there is a general formula based on the income of the property. Maybe you should ask your accountant if he familiar in this area.
Sorry that’s the best I can do.
Good luckElka
Since this was land bought (and sold) pre 20 Sept. 1985 it was important for Westerfield to have this profit designated as a capital gain and not income. As a capital gain it would not be liable for tax on the profit. But those good old days are over. [glum]
In fact, if you’ve owned a property for more then 12 months you want the propfit at sale to be treated as a CG. At least this way you get a 50% discount.
Or have I missed something?
Elka
Thank you all for your replies. I guess I will have to try and persuade my brother in law to approach his brother.
Elka
Hello Cameron
Thank you for taking the time to answer.
Do you think the bank would accept a guarantee from me instead? I am not sure that my brother in law would want to ask his brother for a guarantee or that he would get one if he asks.
Under what conditions might they accept my guarantee?
Be well
ElkaHello Fengz
You might like to read the thread at the link below. It’s all about your question.
https://www.propertyinvesting.com/forum/topic/22508.html
Hope this helps
ElkaI’m facinated by your post Froggie. [eh]
Do you mean if the women in question was younger and a dish it would be OK … or have I misunderstood your post?
Personally I think she should have punched him or slapped him as it’s unacceptible behavour and patronising to boot … but sued him???
Hope the poor idiot was insured. Imagine having your family suffer financial hardship because of such a stupid action.
Just my 2 cents
ElkaHello
Thank you Terry and Cata for the great lesson in Hybrid DT’s. You have made it very clear for me. [grad]
Elka
Thanks for the answer MaiA and good luck finding more of these.
Cheers
ElkaWhat a fun contest.
To pinch a little from everyone, how about
Smart Property Solutions or
Smart Real Estate Solutions
with the slogan
If you have a problem with your property then we are your solution.
I also like Sparkys Xpert so I’m stealing it to create
Xpert Property Solutions or
Xpert Real Estate Solutions
You could use the same slogen except end it with “then we are the xperts”
Will be happy to share the reward with anyone I stole from [biggrin]
Cheers
Elka
