Chris,

While I don’t know for sure, I tend to agree with your earlier comment that any attempt to claim deductions against your PPOR – even if you are technically renting it – is likely to fail.

I would imagine the ruling Terry posted regarding unit trusts would also apply to hybrid trusts – since in essence they’re also unit trusts if units…[Read more]

Originally posted by redwing:
the structure of a Hybrid discretionary trust is such that you can distribute losses
No, even a hybrid trust can’t distribute losses.

The way you can negatively gear with a hybrid trust though is to borrow in your own name and then buy income units in the trust. That way the trust actually makes a profit, since it…[Read more]

Originally posted by masteraccountants:
As long as any transfers to the Trust, to pay for deposits on properties to be purchased for example, are recorded as loans, then you also avoid the Trust Transferor Rules.
Are you certain about that, Chris?

From that same document we discussed before:

You will be regarded as a transferor if you:

• hav…[Read more]

Cruiser,

Originally posted by cruiser:
I think Terry was talking about the discretionary trust in the second quote of his in your post.
Those trust loss provisions apply to all non-fixed trusts.

Yes, losses can be carried forward
Not according to those provisions unless certain conditions are met, which it seems to me would be impossible for a…[Read more]

Originally posted by terryw:
The remander of the profit could then be distributed to your spouse or other low income beneficiaries.
By my understanding, you shouldn’t do that while there is an income-unit holder in the trust. I believe discretionally distributing the income at that time would likely disqualify the unit holder from claiming an…[Read more]

Betterbiz,

The company is making an INVESTMENT in income units in a HDT. End of story.
I certainly hope so!

think of it as my HDT
But that’s the thing: if it was your HDT and only returning a small amount of income (say 2%-3%) with no option for capital gain, and expected to remain like that, then I think as a director I would have trouble…[Read more]

Originally posted by betterbiz:
YOU have invested in income units which (ordinarily, depending on the Deed) do not attract any sharing of capital gains.
Yes, the deed allows income-only units with no right to capital gain.

The purpose test (for deductibility of the interest) is applied against you, NOT the trust.
That makes sense.

Whether the…[Read more]

Originally posted by betterbiz:
One’s intent at the start of doing something IS VERY IMPORTANT in tax land … If nothing else it’s often the cornerstone for arguing for/against the application of Part IVA of the Tax Act
One thing I’d be interested in your view on, since you have a tax practice, is something Julia brought up on Somersoft.

Are you…[Read more]

Jo,

But LAND is not CGT exempt UNLESS you build your PPOR on it.
Not talking about it being exempt from anything. Just saying the gains made on sale may be considered income rather than CG.

it will still be liable for CGT at 100% rate (<12 months) or 50% (>12months) discounted rate
Not if it’s classed as a business development (ie. bought with…[Read more]

Perhaps there was a full moon that night also!!!
What… two full moons about four weeks apart?????

Wow… what are the chances of that…

GP

Jo,

He’s not saying there’s no tax on the gains at sale, just that those gains would be treated as income for tax purposes not capital gain.

Thus no 50% discount.

GP

As well as ING, take a look at BankWest:

http://www.abetterdeal.com.au

Essentially identical to ING but with 6% for the first 12 months, after which it reverts to 5.25% the same as ING.

GP

Scrim = wooden wall where wall paper is placed over.
Scrim is a woven fabric backing placed between the wall and the wallpaper.

GP

Another trust specialist in Sydney with a knowledge of hybrid trusts is Nick Moustacas at:

http://www.strategicwealth.com.au

GP

It wouldn’t normally be a good idea to have a company own the assets as you’d lose the 50% CGT discount.

GP

Rob,

One question: where the line says “Director Loans” between the sole director and the trust, would that be from the director’s personal funds or from the trading (or trustee) company funds?

If the director is lending company funds to the trust, I think it would have to be at the ATO-approved interest rate to avoid the Div7a provisions (ie.…[Read more]

I would guess because if the trust (trustee) got sued for some reason, all the assets of that trust would be at risk. However, assets of other trusts, even if controlled by the same trustee, would be safe.

Too many trusts though would mean too much overhead in operating them, so the value at which a new trust would be started would be a trade off…[Read more]

Alex,

Originally posted by alexlee:
‘When the Crash Comes’

You mean “The Day the Bubble Bursts”, or does he have another b00k like that too?

I read the bubble b00k and thought it was a good read. He’s an entertaining writer.

GP

Originally posted by Julia:
Another very important consideration is not being able to distribute losses to beneficiaries. This goes against trust and pro individuals.
Also pro hybrid discretionary trusts.

GP

Obiwan,

For some general info, have a look at some of the links on this page:

http://www.asx.com.au/markets/LMIs_AM2.shtm

GP