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I would think it's more like a company buying back its own shares. There's no tax implication to the company: the shares just get 'cancelled' against shareholders equity, right? Alex

Yes and no. The trust ends up paying more interest than you did previously, but you (the individual) gets the higher than cost proceeds too, to do as you want. Alex

I just had an interesting thought. The problem with redeeming SIUs at cost seems to be that the unit holder gives up the benefit of CG and only get a low net rent (maybe 3, 4%). How about attaching some special perks into the unit? Say, in the case of death of the unit holder, the units will...

What CGT discount does the trust get?

Dale, I suppose it can be clarified by: Trust has $200k in units outstanding. Market value of the asset is $400k. Net rent = $20k. Would the SIU holder get $20k regardless, or would he get $10k and the other $10k will be distributed at the trustee's discretion? i.e. does the % of income...

A more aggressive interpretation of the law would allow you to split taxable income (I would include CG) using the cost of asset / market value of asset calculation, and still deduct interest 100%. i.e. the more aggressive interpretation would be that you can income split without apportioning...

Negatively geared property investment is about negative assessible income while holding the property with the intention of capital gain in the future, no? Alex

Mry, in that case, what is your view on how the trust deed Dale uses states that the amount of income the unitholder is entitled to (assuming it includes both ordinary income and capital gains - I agree that capital and capital gains are different) is calculated by unit value / market value x...

All of which is fair enough, surely. The point of using the trust is to achieve asset protection (which is does, since before the asset is sold, if the unit holder is sued creditors will only get the historical cost of the units and all gains are protected) and income splitting (which it also...

I suppose it really depends on the trust deed. If you specify in relation to the income units that it is entitled to a share of the revenue income = funds subscribed to hybrid trust / MV of investment in relevant income year (I'm quoting from documents sent to me by Dale but not prepared by his...

My understanding of the documents is that (1) applies. The calculation being, unit cost / market value of trust assets = 50% (200 / 400) so the unitholder gets 50% of ALL taxable income from the trust (including CG). Ronin's main concern seems to be how the trust could theoretically redeem...

Dale's view seems to be (correct me if I'm wrong) that the INCOME units entitles the unitholder to BOTH normal income (rent, etc) AND CG. When you look at your tax return, CG is taxed as part of your normal income (in that it doesn't have a special rate - the discount is something that's applied...

Hi, Dale, My understanding of the reading of the docs is that the income units entitles the unit holder to income proportional to value of units / market value of assets? Is this correct? i.e. as trust assets grow the portion of income the unitholder is entitled to decreases, though the income...

In which case, even if a doctor is sued and the ATO invalidates the interest deductions, if anything the doctor will have fewer personal assets because the ATO would go after him/her for back taxes. However, the trust assets will still be protected. I don't see why a HDT is not a good choice if...

There are two elements to this, though. One is deductibility of interest payments. If the ATO says it's just a scheme predominantly for tax benefits then it can disallow interest payments. Notwithstanding that, though, the property is still owned by the trust. If the ATO disallows the interest...

Twitch, if the units only entitle the unitholder to the INCOME of the trust, how does one calculate the market value? I would have thought the only way is some sort of discounted cashflow method?

Whereas a smaller firm might have charged less. The Big 4 might be better for certain things that require a worldwide firm (transfer pricing, audits in multiple locations around the world, etc) but big companies don't always offer the best service or product.

I'm reading the HDT thread, and just wanted to make a general comment on why big firms may not recommend that their clients use a certain type of structure such as HDTs. Reason: they are not experts at it. Now, obviously a big 4 firm has the resouces to find out everything about HDTs if they...