I can’t see what all the fuss is about. You can set up a trust from as little as $275 – a good trust. Land tax may be a little bit extra, a $1000 or so per year. You can do your own tax return, so why not set up a trust??

Worse case scenario is you pay a bit more land tax, but this is offset by income tax savings, CGT savings, asset protection, estate planning advantages etc etc

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Hi Carlin

Seems like you have been thinking about structures for ages!

I haven’t read any of Margaret Lomas’ books, but from what I have heard and seen, her company targets mum and dad investors. ie the average investor. If you want to be an average investor, then follow her advice, if you want to be rich, you had better do your own research including getting the advice of experts in structuring. She is probably not a solicitor nor accountant.

I am not sure what her objections would be. But with regard to the govt changing the rules, this could happen, but so could many things. We can only go on what the current situation is, and what we think is likely to happen.

If the ATO were to disallow the claiming of interest against personal income for a hybrid trust, then you would still be left with a discretionary trust. Still much better than holding assets in your own name.

Other than tax benefits, there are also many other benefits of a trust, but few disadvatages (extra land tax and extra running costs).

Just keep on reading as much as you can. No one is going to understand your situation better than yourself.

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Hi again Stuart

Been thinking. The trustee is legally required to act in the best interest of the beneficiaries, so there may be still some hope. And as Gross alluded to, it may not be a case of fraud or deceit by the accoutant. He may have really had the best interests of your friends in mind.

14 years is a long time, and things were certainly much different back then. It seems like your friends must have been getting distributions of income from the trust during this time – or they would have complained sooner.

If it is a refinance, how did they get the loan in the first place?

What happens if the accountant’s wife dies? Who is the next appointer?

Your friends becoming trustees or directors of the trustee company may be easy, but it is the appointer that they really need to become as the appointer has the power to chose the trustee.

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Thanks Stuart

It may be still suseptible to attack, but anyone doing a search would see the mortgage and probably assume there is no equity there and not go the extra steps and hopefully drop the case there. Suing someone is costly, and people generally only proceed if there is a hope that they can be some money in the end.

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This is terrible. They may have some legal recourse in suing the accountant somehow.

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Andrew, These loans still show up on your CRAA. Since banks require personal guarrantees, these loans will be assessed in your serviceability (if you tell the lender about them) and creating a new entity will not help in this regard – although it may be good practice.

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I agree that Dale’s book is worth the money. It is written in a way the average person can easoly understand.

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A bank cannot accept a guarrantee from you if you are not an owner of the property.

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You may very well be right. Lying on a stat dec would certainly be illegal. And there could be tax consequences ATO were to get a hold of your declaration where you have exaggerated your inocme – they might just beleive you and issue you with a notice of assessment on that income amount.

Having said that, what you describe is very common. There probably wouldn’t be too many low doc loans out there where people have put down the correct income.

An alternative is the No Doc loan where income is not required to be listed. These go to 80% LVR these days.

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This seems to be standard practice – charging interest on late settlements. Don’t worry too much, it is a small amount, and you would have saved a little bit in interest by having you loan start later anyway.

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