Originally posted by rhysadams:
Could you let me know about running a Hybrid Discretionary Trust and distributing losses?
I’m no accountant, but from my understanding it’s not possible to distribute losses from any sort of trust.

What you can do with a hybrid trust though is borrow money external to the trust and use it to buy income units. That…[Read more]

Originally posted by hellman:
Pay 50% discount on CGT (so 15%)
Where do you get 15% from? The tax rate in this case is the beneficiary’s rate on half the gain. It would only be 15% if the beneficary was on a 30% tax rate.

Hybrid trusts can “transfer” (via ‘units’) the loss to personal income
Hybrid trusts cannot distribute losses. What they can…[Read more]

The primary reasons for using a trust are flexibility in distributing profits, which helps minimize tax, and asset protection.

GP

Originally posted by crgiron:
If I set up a company … Novice investor
If you are planning to invest in property, as opposed to running a development business, then you may want to consider other investment structures in preference to a company.

Companies can’t get the 50% CGT discount that individuals and trust beneficiaries can, potentially…[Read more]

Eleven,

Originally posted by Eleven:
the asset is 100% protected
Small quibble: an asset is never 100% protected – especially not if you’re married!

And in that scenario it’s only protected against you being sued. It could still be taken if the trust itself (ie. the trustee) is sued.

Cata:

Make sure that you can change beneficiaries if you…[Read more]

I love those examples they always give: if you’d invested $X in XYZ shares in 1990, you’d now be a multi-squillionaire!

I notice they never give examples like: if you’d invested $X in AMP in 1999, you’d now have lost 2/3rds of your capital.

Or, if you’d invested $X in Air NZ in 1999, you’d now have lost over 90% of your capital!

Yes, it’s so…[Read more]

Originally posted by Eleven:
It would be better to have a Pty Ltd as a trustee of the DT so in the worst scenario the tax bracket would be 30%.And franked dividends could be distributed to shareholders.
Are you sure this is what he said? A company as trustee is standard, but that “worst case scenario” would presumably be making distributions to…[Read more]

Munjy,

I’m only going from limited knowledge here, but…

Originally posted by munjy:
the purchase of anything used by any business to be income producing is tax deductible
Not so. Only expenses can be claimed, where an expense is a non-recoverable outgoing. When an asset is purchased, all that’s happening is an amount of cash is being replaced…[Read more]

Originally posted by Eleven:
I think that if I am buying units from the HDT, that will allow me to deduct the interest from my personal income tax
It will, but it also means you will get all the income from the trust (or at least from the assets purchased with those funds).

So if the property is positively geared, where there is extra income…[Read more]

Originally posted by coastymike:
The main reason is that companies are not eligible for the 50% CGT discount.
I have personal experience with this restriction, and have had numerous headaches trying to live with it. To be a little fair to myself, I got into the situation before the 50% CGT discount was introduced, and a company structure otherwise…[Read more]

Originally posted by munjy:
is it possible for a company to use pretax dollars to purchase property
By this I gather you’re asking is it possible for a company to claim a tax deduction for the cost of property purchases.

While there may possibly be some special situations for certain types of businesses (although I can’t think what), I would say…[Read more]

Eleven,

From my understanding, you can do all of that with just an HDT, except for the bit about transferring to super. If that’s important, then the separate unit trust may be necessary.

Not sure about having a trust as trustee of another trust. I wouldn’t have thought a trust could be a trustee, since it’s just controlled by its own trustee. I…[Read more]

I haven’t seen that resource, but I would imagine that if the directors act as guarantors, then the company would be able to borrow much the same as the directors could personally.

And one thing to consider regarding “investing” (as opposed to doing business) in a company is that you’ll lose the 50% CGT discount for investments held for more than…[Read more]

Originally posted by westan:
if the entity is an australian one then you will need to pay CGT
And if the entity is a NZ one, with NZ trustees or directors, then you may still need to pay tax in Australia.

GP

Take a look at Leon Wilson’s “The Business of Share Trading”.

Don’t remember it having too much about tax and stuff, but it covers a lot about share trading and technical analysis. Nothing much about fundamental analysis though from memory.

GP

Originally posted by Cata:
What is ISTM?
Shorthand []

It Seems To Me …

GP

Cata,

So when you say your preference is for a discretionary trust, would you include a hybrid trust provided no units are on issue?

If so, then ISTM that a hybrid trust would be more flexible, being the same as a discretionary trust if no units are issued, but with units available if circumstances favour their issue (eg. negative gearing).

GP

Originally posted by Cata:
Hybrid trusts are good but my preference is a Discertionary Trust.
My understanding is that a hybrid trust is the same as a discretionary trust if no units are issued.

GP

Originally posted by Terryw:
if a family trust election needs to be declared (ie there are losses or dividends over $5000 pa)
I believe the limit is $5000 of franking credits per beneficiary, not the actual dividend amount.

GP

Zen1,

Originally posted by zen1:
where you can put an asset in a trust name but still get negative gearing benefits. I just got off the phone with my accountant, she said I can’t put say an IP under a trust and still get a negative gearing benefits.
You can use a hybrid discretionary trust, which is a discretionary trust that can also issue…[Read more]