Forum Replies Created
Scott,
Thanks for the info. I hadn’t thought about terraces, although I did live in one for a while in Enmore.
And I have to say, for some reason I was thinking of Enfield, not Enmore [blush2] (perhaps because it’s closer to where I live now and I go through there quite a lot).
GP
Laurence,
I have never heard of them, but I’m wondering what is the supposed benefit of having one, compared to a standard discretionary or hybrid trust?
GP
Roofarmer,
I have no idea about contacts, but I’m wondering what sort of building is on a 5.5m wide property. If it had the usual gaps to the boundaries, then the building would only be about 3.5m wide.
And I would have thought a 330 sqm property would be too small to subdivide (but that’s only my impression).
GP
Originally posted by murph38:I have lived in the house for about one year
But owned it for two years? What was happening with it for the rest of that time?
If it’s only ever been your principal place of residence, then I think it should be CGT exempt. However, if you were renting it out for some of the time, then it would probably be different.
GP
Terry,
Just noticed in your earlier post you said:
Hybrid trusts can’t really distribute losses, they work by the trustee borrowing to borrow units in the trust.From my understanding, it doesn’t have to be the trustee borrowing the money. I believe anyone can borrow money and then buy units in the trust, although I don’t know how closely related that person would have to be for it to still be considered a family trust.
In my own case, I’m intending to have a company buy units in the trust, and possibly myself as well. Neither are the trustee.
GP
Glenn,
Just a general comment…
It would depend on your complete circumstances, like if you’re intending to buy more properties in future, whether you’d be the only beneficiary of a trust, whether you’re likely to have other sources of income in the future, whether you’re expecting cashflow to exceed your daily needs, whether you’re planning on selling at some time, whether you’re running any business with a risk of being sued, and so on.
There are more things to consider than just the tax implications. Trusts are more expensive to operate, and if you bring all the income back to Australia then you’ll be taxed on it either way. So personal name may well be better, but it depends on all the other aspects as well.
GP
Originally posted by agile:Not sure why you would need a surveyer at this stage unless maybe you were planning on subdividing your land
A quantity surveyor can do depreciation schedules.
GP
Hi Chris,
Originally posted by masteraccountants:You are probably aware that the ATO will not allow you to claim for your NZ rental property losses
I just saw this (I haven’t been here for a while) and thought that this was no longer the case.
According to ID 2002/764 in the ATO legal database:
IssueIs the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for interest expenses incurred from 1 July 2001 in relation to a foreign rental property?
Decision
Yes. The taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for interest expenses incurred from 1 July 2001 in relation to a foreign rental property.
Facts
The taxpayer is an Australian resident.
The taxpayer owns an overseas rental property.
The taxpayer borrowed money to fund the purchase of the rental property.
The taxpayer is assessable on the foreign rental income.
The interest expense on the loan exceeds the rental income from the rental property.
. . . .
For income years commencing on or after 1 July 2001, debt deductions are no longer subject to foreign loss quarantining.
I gather this is only the case though if the property is in the taxpayer’s own name, not some other entity.
This is assuming of course that I’m understanding it correctly, and that it hasn’t changed again since.
Regards,
GPOne important point that Terry didn’t mention is that with a company you lose the 50% CGT discount for assets held longer than 12 months.
If you’re investing for capital gain rather than just income, then that can make a big difference.
GP
Geo,
If you write it down as an algebraic equation then simplify it, the answer is just the phone number you started with.
If you want to see the maths, if you say the first four digits are ‘x’ and the second four digits ‘y’, then you have:
(250(80x+1)+2y-250)/2
which simplifies down to:
10000x+y
which is the original phone number.
GP
Redwing,
BlackIce is a personal firewall but Steve Gibson has always had a thing against it – probably for good reason. I’ve always used ZoneAlarm myself. XP has a built-in firewall if you want to use that, although ZA is probably better.
SP2 for XP has only just been released. Personally I wouldn’t install it until it’s been around for a while. Let someone else find the major bugs.
Also, did you know that laptops aren’t subject to FBT? If you’re working or have your own company, you can get the company to reimburse you for it and take it as a salary sacrifice. That way you effectively get to buy it with before-tax money, and you can still depreciate it yourself if you’re using it for business-related purposes. If you didn’t know that, ask your accountant about it.
GP
Monopoly (and everyone),
To avoid running off the page with large URLs like that, you could try this instead:
GP
Originally posted by Still in School:actually you can now leverage up to 75% on most bank shares
If you have a LOC against your home mortgage with enough unused limit, you could effectively leverage 100% for buying shares, with no margin calls and at mortgage rates rather than margin lending rates.
Of course if you lose money, it’s going to take longer to pay off the house.
For share sites, I also find http://www.sharetrader.co.nz quite good. It’s a NZ site but covers the ASX as well as the NZX.
And for books, I found Leon Wilson’s “The Business of Share Trading” a very good introduction to both share trading as a profession and technical analysis. Other good books on TA are the Daryl Guppy ones and the old Edwards & Magee book “The Technical Analysis of Stock Trends”. The latter is pre-computer (at least my 1984 version is – I haven’t seen the latest edition) and concentrates on chart patterns rather than technical indicators. It’s also American with examples from the 1920s to the 1950s, but in general I think is still quite applicable.
GP
Originally posted by Pursefattener:Why is it that trusts only last for 80 years?
To comply with a thing called the “rule against perpetuities”.
Google it and you’ll get the idea. Apparently it’s a rather complicated piece of law.
GP
Originally posted by swinys:Can either of you suggest an accountant who is knowledgeable on cross border tax issues?
Not in Australia, but one I had recommended to me in Auckland is Chris Raynal at Master Accountants:
http://www.masteraccountants.co.nz
He used to be a CPA in Australia specialising in property before moving to NZ a few years ago (so he said in his response to my email).
I haven’t used him yet, but am seriously considering doing so if I buy property in NZ.
GP
Originally posted by WallFlower:Seperate Tust, Seperate Corporate Trustee??
I don’t know that you’d need a separate trustee company, but something to ask about.
Another $2000 to cough up and were off and running?I think you have to compare it to what you potentially could lose otherwise if the business failed. Consider it an insurance premium.
GP
Derek,
both investment vehicles, over the long term, are effectively ‘neck and neck’But are those performance figures based on all properties and all shares as an average?
Given that astute investors would only buy a fraction of the available properties, and only specific shares a certain times, do the averages for the whole markets mean much (for people here anyway)?
GP
James,
Another good book on trusts is Nick Renton’s “Family Trusts”. The latest edition is only a few months old, and it’s much cheaper than Dale’s book (although Dale’s is very good).
My understanding of trusts is that any profits in the trust at the end of the financial year have to be distributed to beneficiaries, otherwise I think they’re taxed at the top rate. However, unlike a company, the trustee has total discretion with regard to who gets how much (unless it’s a hybrid or unit trust with outstanding units). With a company, it has to go to the shareholders based on the number of shares each holds. This gives the trust advantages if it has a number of low-income beneficiaries.
Also, a trust allows the 50% CGT discount to pass to the beneficiaries for anything held longer than 12 months, whereas a company doesn’t.
If it’s worth the extra cost, I believe you can also have a company as a beneficiary of the trust. Then if the trust has no low income earners left to distribute to, the money can be distributed to the company and still receive the 30% tax rate. If the trust also owns all the company shares, then dividends later paid by the company go back into the trust, along with associated franking credits, for distribution to whichever low income earner you like (preferably one who can make use of all the franking credits). You’d have to look at the issue though of how the company would give its money back to the trust to use until you wanted to dividend it out.
You should speak to a good accountant or structure specialist about all this.
GP
WallFlower,
Because the trust running the business is relatively high risk, so you want to keep it separate from your passive investments.
If the business goes belly up owing $1m, you don’t want the liquidators selling off your other investments to pay the creditors.
GP
