Trust Magic

hi Richard

Yes, Trust Magic is good isn’t it!

An accountant can set up your trust, but they will be simply buying one over the internet. You could do this yourself as well.

I don’t know about the costs. I have heard accountants say you can claim the costs, but I always thought the cost of estalishing a trust was a blackhole type expense.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

I couldn’t claim cost of creating trust so I don’t think one can claim.

Cheers
PropertyGuRu [sultan]
Mortgage Consultant
[email protected]
MSN ID: amitash, Yahoo Id: bornguru

NZ loan pre approval from OZ in 48 hours

Rich,

You can certainly establish an accounting practice through a trust structure but you should be aware of the various PSI rules and ensure that you comply.

With respect to the deductibility of costs for establish a business structure per S40-880, ITAA 1997, certain captial expenditure is deductible over five years if they were incurred in the establishment of a business structure.

Professional advice regarding the appropriate structure for operating a business will qualify as part of the establishment costs to be written off over five years. Also refer to ATO ID 2003/151 and 152.

I agree that a trust can be established by an individual through the internet but then you do not get any associated advice. For example if you were to go along and establish a trust through LawCentral will you have established a hybrid trust ? The answer is no because LawCentral only offer discretionary trusts online for $275. It does not offer hybrid trusts online and they are $440. No direspect to TerryW (I think he is great at providing advice) but if you went along to lawcentral and setup your discretionary trust and then wanted to neagtive gear through the trust then i’m sorry it won’t be possible.

Now you will pay an accountant up to $1,000 for a hybrid trust setup and then the next question is well what does the accountant do for the extra money.

Firstly you will be told that you can claim the setup costs over 5 years. I see that none of the posts have actually given correct advice and if on the top bracket you have just lost $500 in tax savings. (Always said that free advice is uaually worth what u pay for it – in this case it would have cost you $500)

Secondly they will have provided some basic advice as to whether the structure is appropriate and hopefully provided a checklist of activities that you will need to undertake (or the accountant will undertake) once the trust has been established e.g. establishing a bank account, registering for an ABN, GST, PAYG etc.

The accountant will then provide some advice regarding trust losses and the four rules that must be met if making trust losses and a family trust election has not been made. Whether a family trust or interposed entity election should be made and the implications of such. Information will be provided regarding franking credits and the impact of not making a FTE.

So although someone can go online and establish a trust themselves sometimes the client has purchased something that does not meet there needs. I have had clients purchase an online discretionary trust and then wondered why they could not issue special income units. Unfortunately they then incur the costs of a new trust PLUS my fees. A very expensive exercise.

Anyway for those who aren’t accountants and want to establish things yourself all i can say is lotsa luck.