Spot on Jules1

Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.au

Hi Jules1,

It is not a major tax issue.

If you are unable to claim the 6 year absence rule (i.e you are buying a PPOR elsewhere), you need to take a market valuation of your property at the date it ceased being your PPOR. This then becomes your cost base for CGT purposes.

Cheers,

Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.au

Hi Carlin,

The 221D is lodged with the ATO to reduce the amount of PAYG that is deducted from your salary each pay period.
This form is lodged when you have a negative geared investment and/or substantial deductions (i.e. motor vehicle).
The form is effectively an estimate of what your tax return will show at the end of the year.

If you do not…[Read more]

Hi Terry.S,

GST is only applicable on commercial property. If you are wrapping residential property (that is not newly built), you need not worry about GST.

Cheers,

Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.au

Depreciaton still needs to be taken into account when selling an investment property.

Ideally, you should list your depreciation schedule in the contract of sale to state that the sale of the chattels will be at the written down value. Otherwise you could have an assessable gain which is not eligible for the capital gains discount.

When this is…[Read more]

Be careful Leo, initial repairs are not tax deductible and are therefore treated as capital.

To claim a deduction, you would need to rent the property out initially before getting the repair work done.

Cheers,

Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.au

Hi Greg,

A discretionary trust and family trust are the same thing.

Family trust elections were introduced around 1996 by the ATO. They were brought in to reduce the number of tests a family trust had to pass before being allowed to claim its prior year losses.

They are also required when imputation credits over $5,000 are distributed to…[Read more]

Hi Ty,

Brotherly love, you are bringing tears to my eyes!

A structure you could use with your brother is a family trust. As you are related, you are both eligible to receive profit distributions without any tax issues arising (i.e. family trust elections as I mentioned before).

You should document your agreement as to how you are investing and…[Read more]

Hi Brad,

A company may not be the best option for you. Whilst this is simple for a joint venture and income tax is capped at 30%, you will not benefit from the 50% exemption on any capital gains you make.

A trust could also pose a problem if your trust incurrs losses (family trust election rules meaning future income can only be distributed to…[Read more]

In this circumstance where assets could be at risk, the business should operate via a company and any assets should be owned by another entity (i.e. trust) which would lease them across to your company.

At the end of the day, if you are found to be negligent for workcover, the director can be held personally liable as well as the…[Read more]

Hi Andrew,

Looks like the study is paying off. You are spot on with your discussion about source & residence.

There are creative ways of trying to avoid this but I do not encourage that.

The NZ rental income is declared on your NZ tax return and also your Australian tax return as foreign income (with a foreign tax credit).
If a capital gain…[Read more]

Hi all,

You can still purchase your family home in a discretionary trust and claim interest and deductions provided the rent being paid is at a market rate. My experience has been that this is more trouble than it is worth.
Unfortunately the tax rules disallow you from claiming an individual tax deduction via a unit trust…[Read more]

Hi Mini,

1. Spotters Fee – If you are an investor, this would be added to the cost base of the asset as an ‘incidental cost in acquiring the asset’. The deduction is not allowable as the cost was incurred before the asset derived income.
However, if you were a property ‘trader’, the cost would be tax deductible.

2. NZ Seminar / education -…[Read more]

Sparticus10,

Finance seems to be the biggest hurdle as to why you need a NZ Trust. However, as the entity has to lodge a NZ tax return and apply for the relevant file numbers, it is probably easier for your NZ accountant to have a NZ structure (Best to ask them).

Cheers,

Mark Unwin
Williams Partners Pty Ltd
http://www.wp.com.au

An Australian entity is generally no good for purchasing in NZ. You will need a NZ structure and you will need to borrow from a NZ bank. The NZ banks tend not to lend to Aussie entities unless you are buying in your own name.

Be careful of setting up a NZ entity where NZ residents ‘control’ your structure to avoid being taxed in…[Read more]

Hi DiamondCreations,

As a general rule, a trust is the best structure to purchase your investment property. However, this may not always be the case depending on your personal details and your future intentions with investing. It will also depend on whether the property is postive cashflow or negatively geared.

The issue you currently have is…[Read more]