What are the consequences of using an asset for personal use if the asset is owned by a trust ?
I am the director of a company that is trustee to a trust. The trust owns residential investment property.
Would I be liable for FBT (as an individual) if I rented the property from my trust?
Any thoughts apreciated.
[smiling]Hi AJS,
Couple of issues,
Firslty FBT won’t be an issue if you or any related persons are not “employed” by the trust, as FBT only applies to employment. Generally, if you are just investing in property then you wouldn’t be employed by the trust.
But, the ATO has cracked down on the scheme of your own trust renting it’s property to you and claiming tax deductions. Basically, you can’t do it. But the trust beneficiaries/unit holders will still be liable for CGT on sale even though no tax benefit will be gained throughout.
Hope this helps
Ross
Thanks Ross, much appreciated
Just following on from this, are there any FBT (or any other) implications if the trust owns a large boat or luxury car?
Would it be better for these to be owned in your own name?Thanks![strum]
CanberraClaire | Capital Buyers Agency
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The same concept applies to FBT, in that there must first be an employment relationship.
If there is no employment relationship and thus no FBT, whether or not to hold the assets in trust will come down to issues such as what , if any, is the tax benefit of holding the assets in the trust, is it just for asset protection, if so what other assets are held in the trust, when sold the assets may have capital or revenue gains or losses, how will these be of benefit or minimised with your other circumstances. What if , or when your circumstances change, how will this change the tax and asset protection of the trust assets?
hope this helps.
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