Zen1,

I’m no accountant, but my understanding is that no, you can’t claim interest deductions yourself for an IP in a standard discretionary trust.

As far as I know, the only way you would be able to do so would be to lend the money to the trust at the same or higher interest rate as you borrowed it, which would normally be pointless.

I’ve seen…[Read more]

Originally posted by NickM:
go to my website
Which is at:

http://www.strategicwealth.com.au

Just to make it a little easier to find [biggrin].

GP

Paul,

I can’t answer your questions, but what you’re describing sounds like a testamentary trust. Ask your advisor about them.

Cheers,
GP

Greg,

I’m no accountant, and have just read up a little on this for my own benefit. You should seek professional advice on this issue.

You can read about it yourself in the tax act if you’re that much of a masochist:

http://tinyurl.com/5n6lk

You want Schedule 2F under the 1936 act.

Also, if you do a search there on “trust losses family…[Read more]

Originally posted by jcls79:
if I elect not to roll forward the tax losses to next year, can I apply it to my other income (from job) for FYE 30 June 2005, considering I am the highest income producing person in trust and I’ve bought units in the hybrid trust?
As has been stated in the other thread, losses in any type of trust cannot be…[Read more]

jcls,

To get the loan out of the trust, I don’t know if you could perhaps refinance the IP by getting the loan in your own name so you could buy units and then pay back the trust loan. Whether or not that would be worthwhile might depend on how much it would all cost to do (especially if you have fixed part of the loan).

And it wouldn’t cover…[Read more]

Terry,

An interesting point. I wonder though, since the loan was used to purchase units even though it’s secured against the IP, if the IP could be sold and the capital returned to the bank without the units being redeemed. I would think (or at least hope, as a unit holder) that there’d be a tie between the injected capital and the units that…[Read more]

The way I see it, in that situation the unit value would be offset by a secured debt to the bank. You personally wouldn’t have anything that could be distributed to creditors since if the units were redeemed, the funds would have to go back to the bank to repay the secured loan.

I’m no lawyer, so I don’t know if it’s that simple or not, but I’m…[Read more]

Originally posted by superman:
I like the principles of diversification obviously. Every dog has is day!
And perhaps more importantly from a diversification point of view, every day has its dog.

GP

I think if the units were taken, the trustee may be able to redeem them to prevent any further income going to them (that may depend on the trust deed though). If they were bought in the first place using a loan from a bank, presumably the bank would get the money back before any other creditors got anything.

However, if you bought units with…[Read more]

Originally posted by zen:
why you need a company as the trustee?
You don’t need one, but it adds a layer of asset protection in case the trustee gets sued.

GP

Why did your accountant advise against a hybrid trust?

It seems to me that a hybrid trust would be exactly what you want. It would allow you to negatively gear the investments with your husband offsetting the interest losses against his other income. Any capital gain could then be distributed to you.

I can’t see why you’d want to carry losses…[Read more]

Originally posted by scorpio:
If you but a property in your own name – you can offset any losses against tax you pay from your regular income sources – usually a job. If it was in a trust – the trust carries the loss, and not claimed directly against your taxable income.
A hybrid discretionary trust can be used for negative gearing property so…[Read more]

If you’re talking about having your own private company in NZ, rather than investing in a commercial property company, then you need to be aware of the Controlled Foreign Company (CFC) provisions.

http://www.ato.gov.au/individuals/content.asp?doc=/content/43914.htm

I’d suggest you see an Australian accountant or lawyer familiar with foreign…[Read more]

Depends on what sort of bank account you put it in, whether term deposits are acceptable, and how much risk you’re willing to take.

For at-call online savings accounts, the last time I looked the best rates were around 5.25%-5.4%, or 6% with BankWest for the first year. Term deposit rates probably higher if you don’t mind a longer term. And if…[Read more]

Hi Chris,

That Foreign Income Return Form Guide I downloaded doesn’t appear to be available for download as a PDF file any more. I looked for it again a few days ago and couldn’t find it.

However, there is a newer online version available. The downloaded version I have is for 1997-1998 while the online version is dated 2003-2004. I had a quick…[Read more]

Just an update after having had a long discussion with someone from the ATO’s foreign section. I have to say though that the person concerned wasn’t right up with these rules himself, and actually stated that this was the first query they’d had on this topic for a couple of years. For much of the discussion he was reading and interpreting the tax…[Read more]

Hi Chris,

Thanks for the article link, but I don’t see anything there that contradicts what I’ve read in the ATO documents, or mentioned here. It just gives a very basic indication of what a transferor is without going into any detail – as you say, just an example.

Cheers,
GP

Hi Chris,

Originally posted by masteraccountants:
We are talking about business dealings and doing them at arms length.
Without knowing exactly what you’re doing, I can’t comment on that further. However, you may be interested in the tax act’s definition of what constitutes an eligible business transaction in relation to transfers to non-resident…[Read more]

Hi Chris,

Originally posted by masteraccountants:
Can I ask you if you have contacted the ATO
I am in the process of doing so, but for international issues the phone support people don’t know. I have to email their international section and wait for them to phone me back.

When a Trust purchases property, it is not a transfer.
I agree. However,…[Read more]