Calling Dale

From: Donna L


>"Secondly, the trust allows
>you to pay other expenses and
>claim them as a tax deduction
>so hat you can live quite well
>and pay little or no tax."


The trustee pays your personal expenses
before tax rather than you paying them
from after tax dollars.

Still not quite sure I understand this Dale.
Let's say family trust owns property and
earns $20,000 k in rent a year. $10,00
goes in interest etc. and the remaining
$10k pays one of the beneficiary's rent,
medical expenses, whatever. Isn't the
$10,000k used to pay personal expenses
counted as a "distribution" to the
beneficiary in the end of year wash-up
and therefore the beneficiary will pay tax
on it at marginal rate of tax? With my
family trust which has earnings from rent,
shares and some business income (no
salary is drawn) the expenses are all
deducted from earnings but my
accountant says I have to "reimburse" the
Trust each year for my personal use of
car, phone expenses etc. Is this
incorrect? I think this was how Alan Bond
did it, i.e. Trust owned everything and paid
all his expenses but at the end of the day
isn't the Trust provision to him his
"income" which should be taxable???


Donna L
 
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Reply: 1
From: Dale Gatherum-Goss


Hi Donna

>The trustee pays your personal
>expenses
>before tax rather than you
>paying them
>from after tax dollars.


If you use the trust structure properly, yes, this can be correct.


>Still not quite sure I
>understand this Dale.

That's OK, most people do not, including most accountants!


>Let's say family trust owns
>property and
>earns $20,000 k in rent a
>year. $10,00
>goes in interest etc. and the
>remaining
>$10k pays one of the
>beneficiary's rent,
>medical expenses, whatever.
>Isn't the
>$10,000k used to pay personal
>expenses
>counted as a "distribution" to
>the
>beneficiary in the end of year
>wash-up
>and therefore the beneficiary
>will pay tax
>on it at marginal rate of tax?


If the accountant and you do not plan this carefully, then yes, the scenario that you quote is correct. However, if you tweak things a little then the payments might be claimable as a tax deduction to the trust before distribution to the beneficiary. A lot will depend upon what you spend your money on and that unfortunately, means that we must talk in general terms on this forum.


>With my
>family trust which has
>earnings from rent,
>shares and some business
>income (no
>salary is drawn) the expenses
>are all
>deducted from earnings but my
>accountant says I have to
>"reimburse" the
>Trust each year for my
>personal use of
>car, phone expenses etc. Is
>this
>incorrect?


yes, in a way that is correct. Otherwise, you pay FBT and this might not be the best result - again, depending upon your circumstances and preferences. If you do, then 100% of the expenses are tax deductible to the trust.


>I think this was how Alan Bond
>did it, i.e. Trust owned
>everything and paid
>all his expenses but at the
>end of the day
>isn't the Trust provision to
>him his
>"income" which should be
>taxable???
>


No, not necessarily so. Again, a lot depends upon what you do with the money and how you look at each expense. For example, if the trust buys a bottle of wine for you to drink it can be a personal expense if you wish to treat it this way. However, you could also treat it as a gift and claim it as a tax deduction . . .

Have fun

Dale
 
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Reply: 1.1
From: Mark Laszczuk


I just want to say here that I have hands down, the best accountant in Australia. Dale, you are the legend of legends, mate! I look forward to a very long and prosperous relationship with you.

Mark
'no hat, some cattle'
 
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Reply: 1.1.1
From: Andrew D


I'm with you there Mark. Dale I think we need to talk again about how to tweak....so I know to structure right first time.
Enjoy
AD

Stumbling blocks are just stepping stones to the successful.
 
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Reply: 1.1.1.1
From: Wei Ng


Hi Dale!

My business partner and myself have an aggressive plan to purchase as many IPs as possible, and we'd like to setup a structure for asset protection & tax minimisation. What do you charge to setup a family trust with a company as a trustee?

The both of us will be the directors of the company. We understand that from a business relationship viewpoint a family trust may not be optimum, but this will be sorted out later. Also, we plan to put a deposit on an IP in our personal names with a "and/or nominee" clause, and THEN setting up the legal entities before settlement. Is there enough time to do this, and any legal issues we should be aware of?

Thanx!


Cheers
Wei
 
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Reply: 1.1.1.1.1
From: Ian Findlay


Hi Wei,

This sounds like asking for specific advice.

1. You might be better personally contacting Dale off forum - he doesn't
bite (much)
2. Specific advice might come with a fee but of course thats up to Dale.
3. The forum exists to give general advice and support/discussion only. One
of the main reasons is the litigious nature of the world we live in.

Good luck . .

Ian

----- Original Message -----
From: "propertyforum Listmanager" <listmanager@bne003w.webcentral.com.au>
To: <Recipients of 'propertyforum' suppressed>
Sent: Friday, August 09, 2002 3:29 PM
Subject: Calling Dale


> From: "Wei Ng" <yeewei@optushome.com.au>
>
> Hi Dale!
>
> My business partner and myself have an aggressive plan to purchase as many
IPs as possible, and we'd like to setup a structure for asset protection &
tax minimisation. What do you charge to setup a family trust with a company
as a trustee?
>
> The both of us will be the directors of the company. We understand that
from a business relationship viewpoint a family trust may not be optimum,
but this will be sorted out later. Also, we plan to put a deposit on an IP
in our personal names with a "and/or nominee" clause, and THEN setting up
the legal entities before settlement. Is there enough time to do this, and
any legal issues we should be aware of?
>
> Thanx!
>
>
> Cheers
> Wei
>
>
>
> To reply: mailto:propertyforum.79652@bne003w.webcentral.com.au
> To start a new topic: mailto:propertyforum@bne003w.webcentral.com.au
> To login: http://bne003w.webcentral.com.au:80/~wb013
>
 
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Reply: 1.1.1.1.2
From: Dale Gatherum-Goss


Hi Wei!

I tend to agree with Ian and think that personal issues such as these should be addressed off the forum for privacy reasons.


>My business partner and myself
>have an aggressive plan to
>purchase as many IPs as
>possible, and we'd like to
>setup a structure for asset
>protection & tax minimisation.

Terrific!!


>What do you charge to setup a
>family trust with a company as
>a trustee?

The total including paying the stamp duty on your behalf, applying for a TFN & ABN etc are $1,950.


>
>The both of us will be the
>directors of the company. We
>understand that from a
>business relationship
>viewpoint a family trust may
>not be optimum, but this will
>be sorted out later.


Be careful. You might want to plan this carefully as to who are directors and who are shareholders when there is also a business involved.


>Also, we plan to put a deposit on an IP
>in our personal names with a
>"and/or nominee" clause, and
>THEN setting up the legal
>entities before settlement. Is
>there enough time to do this,
>and any legal issues we should
>be aware of?


Again, be very careful as this might cause double stamp duty depending upon where you are . . . you might like to have a talk to a solicitor as well.


>Thanx!

Have fun

Dale
 
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Reply: 1.1.1.1.2.1
From: Wei Ng


Oops! I apologise for the specific nature of the question. Will be in contact with you soon Dale to arrange a confidential discussion. Thank you!


Cheers
Wei
 
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