Forum Replies Created
- Originally posted by cajun:
only assets at this time are shares which I understand I have to distribute the dividends regardless, albeit a “book entry” only
I assume you mean the shares are in the trust, not the company. Based on my understanding, a trust must distribute all profits each year otherwise the trust will get taxed at the top marginal rate (I think it is).
So a dividend into the trust would need to be distributed to someone, unless offset against other losses (which you wouldn’t have yet).
I believe this would be the case in any type of trust, including a hybrid or unit trust. However, you should ask a professional advisor to be certain of the details.
GP
Paul,
transferring from a discretionary family trust to a hybrid oneTransferring what? Do you currently have any assets owned by the discretionary trust?
read Dale’s advice about this, but although he said it can be done, it could be dicey in regard to the closing of the first and creation of a new oneDo you remember where in the book Dale talks about this (to save me searching the book to try and find it)?
GP
Rob,
That link is for the MMX version of the Pentium. The original Pentium was from 1993.
http://www.intel.com/pressroom/kits/quickreffam.htm#pentium
GP
Marcus,
You have to know you’re going to have a refund, and state why you will and approximately how much it will be (at least you did when I had one some years ago).
And the ATO doesn’t have to grant the exemption, but if it’s for legitimate reasons, then I don’t see why they wouldn’t.
GP
Originally posted by WallFlower:I think if a trust has a company as trustee the company is eligble for the concession
I don’t think so. Only beneficiaries receive distributions from a trust, not the trustee, and companies are not entitled to the 50% discount. Capital gain is taxed at 30% just the same as other income.
Note however that I am not an accountant and this is just my understanding.
GP
Originally posted by kp:why put your investments or “property for sale” in a trust apart from providing flexibility to distribute to minimise tax (except for CGT)since it doesn’t qualify for the 50% concession ?
By my understanding, profit and capital gain should not be retained in a trust (unless you want to pay tax at the top marginal rate), so should be distributed to the beneficiaries each year. The 50% CGT discount then passes through to the beneficiary. If the beneficiary is an individual, he/she gets to use it, but if it is a company, it doesn’t.
So I think the only time you don’t get the 50% discount is if the gain passes to or through a company, or the asset hasn’t been held for at least 12 months.
The other main reason for holding property in a trust is for asset protection, especially if the individual operates a business or other risky activity.
Note that I am not an accountant and this is only my understanding. It is only intended as comment, not advice.
GP
Mumarina,
Thanks for the article link. I’ve passed it on to a few of the others who are considering this investment.
GP
Originally posted by The Mortgage Adviser:If there is a fire or an extended drought, your yield is gone
I haven’t read the PDS, but they did mention that it was insured for fire and a few other things. Still, I’m not sure how that would affect returns.
How do you know anyone will actually want those trees in ten years or pay the big dollars for them?Obviously you don’t, but that’s why they included the (allegedly) independant report with return forecasts (which I haven’t read either).
GP
My work had a couple of financial advisers in yesterday and they were suggesting putting some money into an ATO-approved managed investment scheme in the ag industry. In this case, trees for woodchipping near Esperance in WA.
Supposedly 100% deductible up front with no CGT on maturity (not sure how that works). Independant return projections of around 9%pa (they said about 14% when the lack of CGT is taken into consideration) but money locked away for 10 years.
The latter put me off, but I wonder how good an investment these MIS’s really are.
GP
Originally posted by pumpkin:If you purchase in tenants in common, can you specify percentage owned, so that if one earns more than the other (in different tax brackets) then the one earning less gets the majority of the profits (for tax purposes only) to reduce the tax.
I’m not an accountant, but my understanding is that income and capital gain have to be apportioned as per the ownership percentages specified on the title.
GP
Originally posted by pumpkin:When you say that you get taxed 100% within 12 months, what is that percentage, surely not your whole profit?
Don’t confuse taxable income with the amount of tax to pay. The 100% and 50% figures are talking about taxable income. How much tax you would then pay would depend on your marginal tax rate.
GP
Originally posted by Terryw:So what if a new trust were formed with both parties as trustees and beneficiaries. The Capital gain could then be distributed to the new trust
This sounds back-to-front to me. You want to make the original trust (the one with the gains) a beneficiary of the new trust to avoid resettlement problems, but how does that allow you to distribute the gains? Gains are distributed TO beneficiaries, not FROM them.
And if it was the other way around, with the new trust being a beneficiary of the original trust, then I think it would cause the same resettlement problems as adding the individual directly.
This is of course just an observation and not intended as advice etc. etc.
GP
Why is it the “11 second” solution? The calculation doesn’t normally take more than 2 or 3 seconds to do. [ponder]
GP
Many of these acronyms pre-date the Web and come from the old days of bulletin boards and CompuServe.
Here’s a list of ones commonly used on CompuServe (some more commonly than others):
AAMOF – As a matter of fact
AFAICT – As far as I can tell
AFAIK – As far as I know
BRB – Be right back (during live chat)
BTW – By the way
CAM – Couldn’t agree more
D&T – Drink & type
EG – Evil grin
EMFJI – Excuse me for jumping in
FUBAR – F***ed up beyond all recognition
FUD – Fear, uncertainty and doubt
FWIW – For what it’s worth
FYI – For your information
FX – Fingers crossed
GD&R – Grinning, ducking and running
GD&WVVF – Grinning, ducking and walking very, very fast
GFETE – Grinning from ear to ear
GIGO – Garage In, Gospel Out
IAE – In any event
IANAL – I am not a lawyer (but)
IIRC – If I recall correctly
IMHO – In my humble opinion
IMO – In my opinion
IOW – In other words
ISTM – It seems to me
ITIGTTU – I think I’m going to throw up
IWFM – It works for me
LOL – Laughing out loud
NWS – Not with standing
OIC – Oh I see
OTOH – On the other hand
PITA – Pain in the arse
POV – Point of view
PMFJI – Pardon me for jumping in
ROFL – Rolling on floor, laughing
ROFLMAO – Rolling on the floor laughing my arse off
ROFLOL – Rolling on floor, laughing out loud
ROFM – Rolling on the floor, moaning
RSN – Real soon now
RTFM – Read the f***ing manual
SFTH – Straight from the heart
SNAFU – Situation normal all f***ed up
TBH – To be honest
TIA – Thanks in advance
TIC – Tongue in cheek
TVM – Thanks very much
TTFN – Ta-ta for now
TW – Touch wood
VBG – Very big grin
WEG – Wicked evil grin
WRT – With respect to
YHTNOTH – You hit the nail on the headIf you search the Web, you’ll find lists of more than you’ll ever be able to remember.
GP
I’m not an accountant, but from my understanding…
Originally posted by dreamweaver:I gather from some of the posts on this topic that gains made in NZ would have to remain there.
It’s not just a matter of them remaining there. They can’t be gains that you personally have made, otherwise you still have to declare them as foreign income for Australian tax purposes.
The suggested idea was that income or gains made in a NZ trust would not count as yours as long as they weren’t distributed to you.
Is there an intelligent yet legal way of transferring gains made in NZ into Australia without having to sacrifice the tax advantages available in NZ?If you mean transferring into Australia so that you can use the funds yourself, then I don’t know of any way of legally avoiding Australian CGT in that scenario.
However, if you used the gains in the NZ trust to purchase Australian property in the trust’s name, then I’m not sure how that would go. Also, I don’t know what would then happen when the NZ trust later sold the Australian property. You would need to check with an accountant familiar with these things.
GP
Originally posted by The Mortgage Adviser:I don’t consider using a company as the worst entity to hold real estate
I think it is the worst entity for holding any appreciating assets that will give capital gain, as you can’t pass the 50% CGT concession through a company.
For purely income investments it may not be such a big deal, although it is probably still better to hold those in a trust and just have the company as a beneficiary. The trust gives much more flexibility for distributing income and better asset protection.
GP
Originally posted by kay henry:I reckon where Neil went to visit was probably a town of only a couple of hundred- if that- no RE office etc- it has to be small.
I’d say so. I used to live in a NZ country town of about 3,000 and they have at least two or three RE agencies (I was there a few months ago and had a look in the windows).
GP
Originally posted by WayupNorth:can someone tell me whether a discretionary trust is still entitled to the 50% exemption for CGT on selling the property if the asset is held for longer than 12 months ?
My understanding is that capital gains in the trust must be distributed each year to the beneficiaries, who would be able to claim the 50% discount.
However, I’m not an accountant, and this is just my understanding.
GP
Jeff,
Originally posted by jbro:Thus any monies being put into the trust from the directors can be classed as taxable income to trust and a loss to the director that is supplying the income
I believe the idea is that you would lend money to the trust, in which case it is not taxable income and not a loss to the person lending it. It stays on the books as a loan which could eventually be paid back.
And trusts don’t have directors – companies do.
GP
