Which state are you or your properties based in?

In NSW at least, discretionary trusts do not receive the land tax threshold. I believe the other states have similar rules.

The two commonly used strategies to minimise land tax are:
1. Use up the land tax thresholds you receive as an individual.
2. Spread your investments across different states…[Read more]

There are a few issues to consider here. The main ones that spring to mind are:

1. Does the trust have any other assets or income? Discretionary trusts cannot negatively gear, they must carry forwards any losses until the trust makes a profit to offset against them. If you have other assets earning an income in the trust you can soak up the tax…[Read more]

Hi Terry,

Could s115-30 (item 4) apply here or would it be overruled by s128-50?

http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s115.30.html

Jerome I would say that in both cases it depends on how you structure your affairs.

For example, the US does not have a franking credit system. If you run through certain types of US entities you would be taxed at the corporate level, but then again at the individual level.

International tax can be a very complicated area – I would definitely see your accountant. I highly doubt the rental manager will take care of your tax obligations for you as that is your responsibility but I’m sure they would be happy to recommend an accountant in the US.

Residents of Australia are taxed on their worldwide income – so you will…[Read more]

Read up on the concept of Net Present Value.

Hi Peter,

Companies are not recommended to hold investment properties, mainly because they do not receive the 50% CGT discount.

In terms of tax planning and asset protection trusts are a far more flexible option. Generally you should keep your business and investments separate to prevent them being exposed to litigation, so you may wish to…[Read more]

I think there are generally three types of arrangement around living expenses:

1. Allowances included as part of your salary package. This will be included in your income and is taxable.
2. Living Away from Home Allowances (LAFHA). This is a type of fringe benefit, so would be tax free to you, and the employer would pay Fringe Benefits Tax.
3.…[Read more]

Hi amy,

You were on the right track, it should be a fairly simple calculation although we are missing a couple of bits of information:

IP Loss = 13,000 (given – im assuming this is the loss shown in your tax return? otherwise ignore depreciation)

add: depreciation (should be in your tax return if you have a copy, otherwise ask your…[Read more]

Are you looking to purchase the new property to live in?

Generally, its not recommended to purchase your house in a trust because:
1. You do not get the main residence CGT exemption and will have to pay CGT when you sell.
2. You will have to pay land tax (although some trusts do not).

I know very little about family law, but I doubt having the…[Read more]

Hi David,

Generally, if the property is not producing income you would capitalise the ownership costs. This means that you cannot claim any deductions for them in the year they are incurred, but they are added to the cost base of the property. When you sell, the cost base will be higher so you will make a smaller capital gain.

I think what’s been said above could be quite confusing. To clarify:

Basically, if you never sell the property (you mentioned renting it out or living in it), you will have to make an adjustment in your BAS to pay back the GST that was refunded to you. So you don’t get to keep it…

The next issue is claiming the GST back. If you lodge a BAS…[Read more]

Tax is an very complex field especially if you’re not sure what you’re doing.

The big cost for a tax return is making your accountant sort through a mass of paperwork and calculate everything.

If you keep good records, file them properly and do a summary sheet of your income/expenses it will cost very little to have an accountant do it for you…[Read more]

I’m not sure it is possible…

The way you’re trying to structure the transaction is:
1. Build the home
2. Claim back $20,000 in GST that you paid to the builder.
3. Rent for over 5 years until it’s no longer a “new residential premises” and then sell GST free.

If you rent it out for over 5 years, I think it ceases to be a “new residential…[Read more]

The best piece of advice would be to speak to a good accountant because there are a lot of things you need to take into account.

Do not use a DIY trust deed. It can cost up to a couple of thousand to have a lawyer set it up but if you want to be cheap now you may pay a heavy price later. The ATO has been paying a lot of attention to trusts…[Read more]

Hi Kate,

My understanding is that it’s incorrect.

The reason is that the bank will require the trustee to guarantee any loans to the trust. If you have a corporate trustee, the director will be required to personally guarantee the loan. I believe this would still show up on your credit history.

The best piece of advice would be to speak to a good accountant because there are a lot of things you need to take into account, and you want to make sure you get it right now or you may pay a heavy price down the track.

A few things to think about though:

1. Are the properties negatively geared? A discretionary trust (DT) can’t use the losses…[Read more]

It’s worth noting that utilising a corporate beneficiary can be dangerous if not done correctly.

You’ll need to speak to an accountant to make sure you don’t get caught by Div 7A. Distributions made from a trust to a company beneficiary can be deemed an unfranked dividend. The company shareholder(s) can be assessed on the whole distribution, and…[Read more]