Hi,
Was wondering if anyone here is able to help with a basic trust question.Have a couple of properties within a discretionary trust. Was thinking of also holding shares within said trust structure.
Is there any disadvantages to doing that?
Also, if there isn’t, how does that work with regards to the franking credits associated with dividend payouts?
Thanks in advance.
Lupus
A trust doesn’t have shares so I’m assuming that the structure you’re talking about involves a company at some level. Is the company the trustee for the trust or a benificiary of the trust? It sounds like the company is a benificiary of the trust and you are trying to access income from the properties by the company paying out dividends to you, is this correct?
As far as I’m aware, if the company is distributing profits from a previous year, which have already been taxed at 30%, then you as the shareholder will recieve franking credits to reflect this, and not have to pay the same tax again. I.e. if youre in the 30% tax bracket you pay no tax on the dividends, if you are in the 42% bracket you might pay 12% etc. I’m not an expert but that’s how I understand it.
Originally posted by lupus1704:Have a couple of properties within a discretionary trust. Was thinking of also holding shares within said trust structure.
Hi Lupus
In Holding shares I assume that is investing in the stock market.
If you are holding the shares long term(longer than 12 months) then I think only issue is asset protection(if the trust falls then you will loose the lot, if the property and shares are in different trusts then you would only loose what’s in one trust).
This is what I would consider or possibly invest in a market linked life bond as this is a life insurance policy not an asset.CATA
Asset Protection Specialist
[email protected]Originally posted by carl_vic:A trust doesn’t have shares so I’m assuming that the structure you’re talking about involves a company at some level. Is the company the trustee for the trust or a benificiary of the trust? It sounds like the company is a benificiary of the trust and you are trying to access income from the properties by the company paying out dividends to you, is this correct?
As far as I’m aware, if the company is distributing profits from a previous year, which have already been taxed at 30%, then you as the shareholder will recieve franking credits to reflect this, and not have to pay the same tax again. I.e. if youre in the 30% tax bracket you pay no tax on the dividends, if you are in the 42% bracket you might pay 12% etc. I’m not an expert but that’s how I understand it.
Carl
I think you misunderstood the question. Lupus seems to want his/her trust to own shares (eg telstra, qantas etc).
As far as I am aware, the franking credits of shares etc flow thru to the beneficiaries. There may also be issues with Family Trust elections when the dividends are over certain levels per year.
Terryw
Discover Home Loans
North Sydney
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Hi Terry
Yup, I did. In hind sight it’s pretty obvious that he meant that the TRUST would hold shares, not him holding shares in the trust. I gotta learn not to reply to posts when I havn’t had enough sleep
How did the bangkok property work out by the way?
Hey one and all
Many thanks for the response. What I wanted to know was the effect imputation credits within the trust structure, are they quarantined within the trust or able to be distributed.
Thanks Cata and Terryw for the responses.
Guess from my point of view, was wondering how to work around the stupid predicament Ihave gotten myself into.
Have a -ve geared property within a trust. Trust set up for asset protection, but blasted thing keeps soaking up funds to stay on top of things. Meaning, if I continually keep paying in, am worried about litigation, etc
Was wondering about putting shares in trust, and allowing dividends to cover short fall and yet claim the imputation credits
just trying to think outside the square.
thanks again
Something +ve to offset the -ve is a good idea. Even a +ve IP will offset the loss(have seen this many times).
CATA
Asset Protection Specialist
[email protected]Hi Lupus..what kind of trust structure are you using if you dont mind me asking ..?
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PRetty much a stock standard off the shelf discretionary trusts. No special additions to deed.lupus
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