Not sure what you mean here.

Any entity to claim depreciation and this will be used to reduce the taxable income of that entity. This in turn will reduce the taxable income of the person behind the entity as they will get less money. (but if there is negative income this cannot be used to offset another entity – usually).

That post was 4 years ago, so I cannot remember what I was referring to.

If you want to read about hybrid trusts then try:

TD 2009/17

http://law.ato.gov.au/atolaw/view.htm?docid=%22TXD%2FTD200917%2FNAT%2FATO%2F00001%22

Forrest v Commissioner of Taxation [2010] FCAFC 6

PBR 1011723097188

http://www.ato.gov.au/corporate/content.aspx?doc=/rba/content/1011723097188.htm

PBR 28993

From smsftr 2012/1

Money other than borrowings used to improve an asset

30. Subparagraph 67A(1)(a)(i) provides that borrowings under an LRBA cannot be used to fund improvements. However, money from other sources can be used to improve (or repair or maintain) a single acquirable asset. For example, accumulated funds held by the SMSF may be used to fund the improvements.23 However, any improvements must not result in the acquirable asset becoming a different asset.

Hi  JacM

Can I ask what you pay for the SMSF tax return and auditing?

(I am just about to set up a tax agent business).

Thanks

No.

This is because the partners of a partnership are jointly and severally liable for debts. Could be very dangerous.

Also if you have a charge over personal property then this itself is property. So if you were to get sued the creditor would stand in your shoes and have the benefit of the charge or mortgage over the asset.

There is also provision in the bankruptcy act to make any transaction designed to defeat creditors void. Also provisions regarding the transfer of assets to avoid creditors and/or undervalue. You would have CGT and stamp duty issues on the transfer and possibly more land tax if that person owns other assets. If that person is acting as trustee for you then you still own the assets and they would be available to creditors too.

Also consider what happens if that person:

divorces

dies

goes bankrupt

does a runner

or

misappropriates your funds.

Hi

Best not to have a trading company act as trustee for a variety of reasons such as:

1. Same legal owner of all assets. So if one is sued there will be a burden of providing the assets are held on trust for the other. eg. If the company is sued then the company may need to prove that assets it holds in trust are that. If the company as trustee is sued then the company will have a right to be indemnified out of hte trust assets. If these are not enough to satisfy the debt then the company is personally liable for the short fall – so your business will be at risk.

2. Trading companys will often need to give charges over their assets. Eg. a lender lending to the company in its own right or as trustee will require a mortgage over property as well as a charge over all assets of the company – used to be called a fixed and floating charge. This will complicate things if the company has 2 roles.

Trusts are treaded as separate entities for tax purposes. So if the trust owns an asset it can claim depreciation. If the company owns it then it will claim the depreciation.

Yes, it may be a good idea to do in your SMSF. Seek professional advice as things are tricky.

e.g. The SMSF must pay for all expenses. If you pay yourself then it could be deemed a contribution to the fund and this could result in you contributing too much for the year and the fund attacting penalty tax – excess contributions can be taxed at 46.5%.

SMSF may be able to borrow from members too, without mortgaging the property – eg you have a LOC and on lend to SMSF.

I have seen people analyse things for years.

I had one friend who has a Ph.D and an IT background. He spent years looking at trusts so that he could set up properly. Then when he nearly set up a hybrid trust the ATO had issues with some of them and that through him and then 2 more years went by. Finally he started looking at property and did all sorts of spreadsheets and analysis and lost many a deal because of timing.

Roughly 10 years from when he started he finally purchased a property.

You are at risk.. Parternships should be avoided as you are liable for what the other person does.

But, you should seek legal advice because there are claw back provisiosn under the bankruptcy act. So if something does happen and you are sued and end up bankrupted then any assets you had transferred to the trust will be at risk of being clawed back for creditors.

You should also never own assets in a trading trust as if the trust goes down the assets of the trust are at risk. Use a separate structure to own assets.

And be very wary of using 2 directors. Directors often go down with the ship so why risk both of you?

Its very dangerous investing in other countries and even more so considering it is Indonesia.

On the general investment side:

1. How will you fund this? Can you borrow in Indonesia? Unlikely to be able to borrow from a bank.

2. How about the tax aspects? Very complex when dealing with cross border tax issues. You will need to lodge a tax return in Indonesia and Australia – taking into account the Indonesian property too. So you have exchange rate calculations to deal with as well as the general tax issues such as is there a tax agreement between Australia and Indonesia? Finding a tax agent with knowledge of this will be difficult too. Expect to pay much more for your tax return.

3. Estate planning issues – you will need to look into doing a will in Indonesia as well as Australia. Will an Indonesian court accept a will drawn in Australia? Maybe, but it would have to confirm to the laws in Indonesia. Maybe they won't. What if you die intestate – with an invalid will maybe. What are the intestacy laws there? Who will benefit? What if you want to leave the asset to someone else and there is a statutory requirement that means spouse inherits automatically etc.

4. Getting legal advice there is difficult. You will get contradictory advice from the same lawyer on different days of the week.

5. You will pay stamp duty or tax to the lawyer only to find out a year later that the lawyer spent the money and needs payment again because the tax wasn't paid!

Then you have the general cultural and other issues:

1. How well can you read Indonesian? Can you understand legal contracts written in Indonesia?

2. Are you aware of how widespread corruption is there? Are you prepared for the bribes you will need to pay.

3. Are you ready for the "shakedown"? As a foreigner you will pay more for everything. Amounts will be added to everybill. Repairs will cost more, electricity more.

4. Are you aware that the legal system doesn't work the same as in Australia. Even if you have a court order it may be unenforceable. To get the court order you will have to bribe at every step along the way. The bureaucracy there is crazy. Even if there is no issues the process for any transaction is long and drawn out. You may have to provide incentives just to get the paperwork processed in a slow manner.

5. Different concepts of time. "jam carot' or rubber time means that if you organise a meeting at 3pm no one will come until 5 to 6 pm. They will blame the traffic, even if there is none. So you will have days and days wasted just waiting around.

I went to Indonesia a few years ago to assist an Australian man who had his property stolen – title transferred. He has a supreme court order to that he is the legal owner but the title still isn't in his control more than 3 years later.