Hi All,
I have a couple of questions regarding a big life move my wife and I are looking to make.
Current Situation:
– We are both currently working in Australia
– My wife owns three IPs in her own name (However, I am also on the loans but not the title)
– We have a discretionary trust with a corporate trustee
– Our discretionary trust owns one IP (we both guarantee the loan)
– Our discretionary trust also owns Australian securities
– Our corporate trustee has only one director (me)Upcoming Changes to Situation:
– I have been offered a new job in Dubai which I will most likely accept – and will commence in January
– My wife and I will relocate to Dubai indefinitely
– We are therefore planning to become non-residents for tax purposesQuestions:
1) I am currently the only director of our corporate trustee – do I need to add another director to the company (as I understand Australian companies need at least one resident director)?2) What implications does our relocation to Dubai (and our new status as non-residents for tax purposes) have on my wife’s three IPs? on our company/trust’s IP and Listed Securities? Do we need to do any fancy legal/accounting changes before we depart?
3) What other basic legal/accounting changes do we need to go through before relocating (I know of a few ones already, such as letting banks know we’re leaving and asking them to withhold 10% of any interest payments to cover tax as we will now be non-residents) etc.
I’d really appreciate any tips and advice from those savvy legal/accounting gurus on the forum!
Also, I’d love to hear from anyone who’s previously made this sort of move (or are planning to in the near future and may have already sought answers to these questions)
Cheers,
1. From a corporations law point of view you may need a new director. You shoudl also consider the terms of the loan agreement – may need bank’s consent.
2. Loss of the 50% CGT discount. No income to offset any losses (other than rent). Losses may carry forward.
3. Consider if you will actually be a non resident. There is a recent case where an aussie went to dubai for work for a number of years yet he was still a tax resient here.Best to seek tax advice on this.
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
Hi Terry,
Thanks very much for the quick response on this!
on 1) I assume this would be spelled out in the loan contract? How would a bank typically respond to having the only two guarantors of a loan change from being residents to non-residents – I expect they may want a third Australian resident guarantor to be added in this case?
on 2) I assume this would apply for all 4 IPs (i.e. the three for my wife and the one for our trust/company)? If so, would be any benefit from transferring the fourth IP from our trust to my wife (as a beneficiary of the trust) and then selling the remaining securities and wrapping up the trust/company structure? This would leave all assets in our personal names and remove the complexity of the trust/company structure.
on 3) I’ve been reading a few of these cases too to try to understand the ATO’s interpretation of ‘non-resident’ (which tends to surround whether or not a ‘permanent place of abode’ has been established from my read). Would it be best to seek a private ruling from the ATO on this? If so, do you know what a likely turn around time may be?
I’ll definitely be seeking advice, so I’m keen to get my head around all of the potential issues and do some of my own research in preparation for this.
Cheers,
1. Yes it would be in the written agreement you entered with the bank. Contract and/or terms and conditions booklet.
2. This would apply to any property owned by the trustee.
There would be benefits of transferring, but also costs and ongoing issues. Lots to consider.3. The problem is your life may not follow what you propose in the private ruling app form. Turn around time is supposed to be 28 days, but is usually longer.
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
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