Hi all,
Let us just sit down and have a friendly discussion here, now( we all know nobody is going to take all suggestions literally and go out and use it without consulting with advisors) and discuss the issues, consideration and possibilities.Issue 1:
My issue is, I am starting to do property Developments at the moment, and setting up a company. I am thinking, whats the best trust structure to use it in?If I use a Hybrid Discretionary, when the profits in the trust needs to be used to buy properties, it has to go to beneficiaries or Beneficiary company at their tax rate. And I cant use the before tax profits to buy properties? PLus I would rather not use this trust to own property since it is a trading business trustee.
Hmm how about setting up another NEW beneficiary company, and that is used to receive the profit and buy property in another Hybrid Discretionary? (or Hybrid Unit?).
Issue 2: Whats the difference between Hybrid Unit and Hybrid Discretionary?
***********************
Fullout
I think you owuld want to get the profits into a trust somehow. if you use a trust, all profits could be diverted to another trust or a comapny or individual. This would give you greater flexibitlity than just using a company.
You had better talk to an accountant on what sort of trust or maybe a combination of trusts, eg unit trust where the units are held by a discretionary trust.
If your current trust is a trading trust, then set up a new one.
Not sure what you mean about using before tax profits to buy property. You would still have to pay tax when using a company structure.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Fullout,
A hybrid trust is a combination of unit and discretionary trust. These should only be used in very particular situations. They are not the solution for every circumstance. Personally I don’t recommend using them at all unless you have an ATO ruling. One of the main purposes of these arrangements is to get the negative gearing benefits accross to the high income earner and the CGT to the low income earner or when the property becomes possitively geared directing that to the low income earner.
An alternative plan that does not have the set up and ongoing costs is to own the property jointly between a low and high income earner. Then the high income earner salary sacrifces the cashflow expenses of the property so all the low income earner has is half the rent, half the deprn and half the CGT. Under these circumstances it is very unlikely that the rental property will ever be anything other than negatively geared to the high income earner. Further as the rental expenses are otherwise deductible no FBT is payable and it is not reportable on the PAYG summary. This doesn’t give you quiet as good a result as the Hybrids but it is supported by legislation, a case and an ATO ruling. For full details and a calculator go to http://www.bantacs.com.auJulia
You must be logged in to reply to this topic. If you don't have an account, you can register here.
