I don’t think there is any problem with one director – this is generally recommended as it limits the guarantees required by lenders. The trustee is just the ‘person’ that runs the trust.

The ASIC could probably be paid by the trust, as the trustee exists to run the trust in this case and would have no income.

Shareholders cannot be held responsible for the company – generally. If they are making decisions, then they could be liable as they may turn out to be defacto directors etc. If personal guarantees are given then they can be held liable for these of course – some banks want guarantees from shareholders too.

I am not an accountant or lawyer, so seek proper advice please.

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I believe ‘corpus’ relates to the capital or principal of the trust. So maybe corpus beneficiary is one who receives the capital of a trust when it is wound up? Just guessing here.

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Depreciation is a cost of holding the asset. The asset is owned by the trust, so it would be the trust that claims any depreciation.

The individual can only claim the interest – because they have purchased income producing units in the trust.

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Hi Dutchie

I agree discretionary trusts are great. But watch out if your properties are making a loss (ie negative geared) as the losses cannot be utilised until the trusts makes a profit. Maybe look into hybrid discretionary trusts if this is the case.

Also trusts are not taxed the same as a business. Trusts no not normally pay tax at all. Trusts distribute all income to a wide variety of beneficiaries who then pay the tax based on their own tax rates. So with careful planning the trust can greatly reduce tax or maybe even eliminate it altogether.

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If your name was added to the loan, the rate would jump to around 10%, this would make a huge difference in repayments. If you want to argue that you are buying a house, your name generally has to appear on title unless you are using a trustee to buy it for you. In which case you will need legal advice.

Maybe you could explain your dilemma to the landlord and ask they let you out of the lease.

Long term, you may be better off with a trust, or your share held in trust – maybe in your daughter’s name. You can then transfer the share at a later date into your own name when the bankruptcy matter disappears = 7 years.

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PTN,

You trust is a business, so you can only claim a deduction for business related activity. If you travel relates to the business, then it could be claimable.

Dale Gatherum Goss says you can claim small items and one off gifts that you could not otherwise claim.

You can rent a house form your trust and the trust claim the interest etc, but if you are running at a loss you will need a HDT or other income in the trust to make it worthwhile. ATO will also be looking closely as this, but there are ways around it.

A trust can only distribute profits, not losses.

A trust could buy a car, but you may be betetr off buying it in your own name??

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Just apply for a loan increase with your existing lender. Maybe go to 80% LVR as a LOC and have a separate loan to the first. That way you can use the funds for the deposit on the next property and borrow the remainder as another loan. Interest could also be paid from the LOC.

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Very interesting Dr X.

Funny about agents calling. A friend of mine sold his unit privately, he put an ad in the paper and specified “no agents”. For the next week he was called by no one but agents trying to get a listing.

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Hi CT

My understanding is that the loan needs to be in the unit holder’s name – which is not necessarily trustee. However, I have seen a few client come to me with it all setup incorrectly, they have the hybrid setup, but have the loan in the trustee’s name, so won’t have any tax advantages.

From what I have seen, if the property in creases in value, the trust has equity. The trust can then borrow more money for further investments. If the individual unit holder wanted to borrow more money, they would probably have to buy more units.

I am not sure of all the finer details of HDT as I am not an accountant and do not use one.

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You may save these fees by selling yourself, but an agent may be able to sell it for a higher price and quicker. This needs to be considered as well.

I have found sales commissions to be around 2.5% of sale price. Some charge extra for advertising, others include it in the fee.

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