ATO has a Draft Tax Ruling.

[D.T.]

Hi all,

Re to the following website:

ATO Law Website: TR 2002/D2

It is regarding using a trust to own your PPOR, hence gaining the ability to claim tax deductions for interest, depreciation and some household expenditures.

Will such a ruling make this impossible to do legally, and do you think it will be retrospective?

I've read a case that showed a doctor who bought his family home in a trust arrangement and claimed deductions which concluded in the FCoT unsucessfully denying them. Im assuming he would have claimed liability risk being separated from his occupation?

Therefore, in future cases I'd be guessing you'd have to have a good reason for doing so? What do our inhouse accountants / pro's think of it?

-Regards

Dave

 

[MichaelM]

Check out this discussion:

http://www.somersoft.com/forums/showthread.php?postid=31776#post31776

Mick.

 

[DaleGG]

H i Dave

There are a couple of important things to remember here:

tax office rulings are not law, but, merely the commissioner's opinion. They are to be considered, but, not necessarily accepted.

there may be many valid reasons why a PPOR is hidden within a trust and the most common if which is asset protection.

The tax office are wary of people using such a structure to own one house and will quickly rethink their thoughts if you have more than one property within the trust.

Dale

 

[bundy1964]

Interesting that they are only apply it in unit trusts.

I would take it that they would treat a hybrid trust as a unit trust?

Discretionary trust can't -ve gear so loss would be caried over or offset against other trust income......right?

bundy

 

[DaleGG]

Hi Bundy

They do this because of the negative gearing aspect and the "round robin" of money, as you suggest.

A hybrid trust has not come under scrutiny, and, because it has features of both type of trusts will probably sit within their too hard basket . . .

Dale

Originally posted by bundy1964
Interesting that they are only apply it in unit trusts.

I would take it that they would treat a hybrid trust as a unit trust?

Discretionary trust can't -ve gear so loss would be caried over or offset against other trust income......right?

bundy

 

[Kris Sheather]

Hint hint..