yeah I know my example it a little flawed, but my brain isn't working enough to come up with a better one.
Your brain is working, it was a good example that things may happen outside the workplace protection.
Forget about trusts!
- Thread starter bianca
- Start date
Your brain is working, it was a good example that things may happen outside the workplace protection.
With the right lending strategies, using trusts can boost your serviceability substantially.
I agree, for most people a trust is unnecessary, but there's always exceptions. Who here is 'most people'?
I agree, for most people a trust is unnecessary, but there's always exceptions. Who here is 'most people'?
I had the same thought. The underlying assumption seems to be that the properties will always make a loss, or that properties actually making a profit are the exception, in which case it doesn't make property sound like much of an investment!
If you assume you're going to make a profit from your investments, then tax minimisation is surely far from a "peripheral" consideration.
Just selling the last of the IP's that are in joint names. This will leave us with all of our current and future IP's in Trusts.
PPOR in wifes name.
xxxx faimly trust
xxxx PTY LTD AFT xxxxx trust no2
xxxx PTY LTD AFT xxxxx trust no3
As other have said, they are tools, you need to work out if they are right for you. We are looking at buy/hold/sell & buy/dev/sell, probably won't hold anything for more than 10 years.
By the end of this year it should be time to review the situation again with the accountant.
cheers
Graeme
PPOR in wifes name.
xxxx faimly trust
xxxx PTY LTD AFT xxxxx trust no2
xxxx PTY LTD AFT xxxxx trust no3
As other have said, they are tools, you need to work out if they are right for you. We are looking at buy/hold/sell & buy/dev/sell, probably won't hold anything for more than 10 years.
By the end of this year it should be time to review the situation again with the accountant.
cheers
Graeme
One of the main disadvantages of holding residential property in your own name is the inability to transfer the property to superannuation at a later point in time and the fact that you do not get to take of advantage of the refinancing principle when redeeming units if a unit trust.
Like all things you need to do some sums, projections, work out the pros and cons and then chart your course accordingly.
Pretty bold statement to say they aren't useful tools but I agree they have been overpromoted to certain people.
Like all things you need to do some sums, projections, work out the pros and cons and then chart your course accordingly.
Pretty bold statement to say they aren't useful tools but I agree they have been overpromoted to certain people.
Just thinking about something, If I did move back into the PAYE workforce instead of the Contractor workforce then we would have to review the structure and sort out a bit of negative income to offset some tax.
That would require another visit with the accountant and a bit more reading to decide how to strucutre things and what to invest in to get growth while trying to minimise my taxable income. Different challenges.
With the current structure losses are locked inside the trust structure and can't be used to offset gains from elsewhere.
Regards
Graeme
That would require another visit with the accountant and a bit more reading to decide how to strucutre things and what to invest in to get growth while trying to minimise my taxable income. Different challenges.
With the current structure losses are locked inside the trust structure and can't be used to offset gains from elsewhere.
Regards
Graeme
Be interesting to see what comes out of the Ken Henry review in relation to CGT and investments and also if "entity taxation" will apply to trusts at some point in future (i.e. taxing trusts like companies).
The ATO hates trusts (and I mean reaallly hates them) and we've already seen one instance where the High Court ruled in favour of the taxpayer and the ATO has simply ignored the HC and continues to follow its own "interpretation" of how to deal with trusts.
Must be nice to have a few zillion dollars to fund against any taxpayer challenges.
Zargor
The ATO hates trusts (and I mean reaallly hates them) and we've already seen one instance where the High Court ruled in favour of the taxpayer and the ATO has simply ignored the HC and continues to follow its own "interpretation" of how to deal with trusts.
Must be nice to have a few zillion dollars to fund against any taxpayer challenges.
Zargor
So does anyone know of any first hand example where this has happened in Australia?
Thanks, I see where your coming from, as for below, this sort of thing has happened in the past, but I think it is covered by the "good samaritan" clause/act whatever.
Ahh if only, these days even when youtry to help if something goes wrong. Say Dr. saves someones life but left with permanant brain damage due to lack of tools because he's out of the office, he helps poor guy dying after accident. The guy is left permanently disabled, even though he's alive, the family still want to sue?
Strange IMO.
Rugrat, your example was just fine, that brain seems to be working quite well
So the good samaritan act no longer exists? It's been around for many years, when was outlawed?
So the good samaritan act no longer exists? It's been around for many years, when was outlawed?
Not sure if it no longer exists, but there have been cases where someone has tried to help (and they have, to an extent), but then were sued anyway!
Some people disgust me sometimes..
No, there is still protection for anyone assisting in an emergency situation. Otherwise people may just not assist fearing being sued.
in NSW See
CIVIL LIABILITY ACT 2002 - SECT 57
Protection of good samaritans
57 Protection of good samaritans
(1) A good samaritan does not incur any personal civil liability in respect of any act or omission done or made by the good samaritan in an emergency when assisting a person who is apparently injured or at risk of being injured.
(2) This section does not affect the vicarious liability of any other person for the acts or omissions of the good samaritan.
http://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/s57.html
in NSW See
CIVIL LIABILITY ACT 2002 - SECT 57
Protection of good samaritans
57 Protection of good samaritans
(1) A good samaritan does not incur any personal civil liability in respect of any act or omission done or made by the good samaritan in an emergency when assisting a person who is apparently injured or at risk of being injured.
(2) This section does not affect the vicarious liability of any other person for the acts or omissions of the good samaritan.
http://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/s57.html
This is pretty bad advice. Sweeping generalisations are pretty unhelpful, and wont educate the recipient.
Trusts have many, many advantages. And the longer you go down this path the better they get.
There is a place for Discretionary Trusts and Unit Trusts (I'll steer clear of the Hybrid debate) in many investors arsenal.
I know that I use both and that they both serve very useful purposes.
The original poster's advice is like saying you should never use a ride on mower, they are too big and expensive. Well, for some people, anything but would be too small and ineffective!!
OK, here's my input, fwiw.
I had one property which was run through a trust. A block of flats.
It was negatively geared. For a while. But I furnished the units, one by one, and in doing so, increased the rents by 50%++
Now, even apart from any income issues, there is a HUGE capital gains issue.
I sold the block after three years. I made a very good profit.
In the trust, the profit was distributed in the most tax effective way.
If we had bought and sold through a company, the tax on the profit would have been (I think) 30%.
As an individual, 50% of the profit would have been added to my assessible income for the year. In that year, I was in the higher tax bracket, so I would have had to pay about 24% of the profit.
The tax I had to pay in the tax scenario was substantially lower than either of these scenarios.
Bear in mind that when I bought, the trust was not a good structure. It lost me money. I invested with asset protection as my primary purpose.
But the structure saved me tens of thousands of dollars.
First of all- the key word was "AVERAGE". Geoffw, i don't think you could class yourself as average.
Piston broke, me thinks I may know a little about investing, just a little, and I have shared for many years. Forget about trusts, is my opinion. I have done it, i am not a stressed out, money hungry, wheeler and dealer, just an average person who has lead a pretty fine life, without a trust.
Sure, trusts have their place, but I am merely trying to tell the beginners that buying your first couple of IP's should not be that difficult. AVERAGE People can get bogged down with all the supposed crap that is associated with investing.An investor who has one or three ip's, and plans to hold them, has other income, a stable home life, should not have some idea that they have made mistakes because they are "trustless'. I have met too many younger ones, who are keen, but just don't have either the mental capacity or the time, to "set up" all the right entities to keep their money "safe" or " minimize tax" or whatever other reason . This idea can keep them from starting in the first place. tell them it is as easy as working hard, saving and buying.
If they then turn into moguls, the "trustless' ip's realy wont matter that much.
How many times do you see beginners on here trying to get their heads around how to set up the right trust etc etc? Waste of time. Just go out, when you can, and START.
If you run a business- pay your insurances, pay your public liability. It is all tax deductable. If you rent out your houses, pay your insurances. If you get divorced, they will still get your trust anyway, unless you are an unscrupulous ***** facing bankrupcy,who wants to protect his investments at the cost of all the creditors who, by rights, should be paid anyway( and we see plenty of that happening every day, Storm anyone, defunct builders, anyone?)And i am NOT saying that everyone who files for bankrupcy is unscrupulous, but many of the big players are. They can hide in their trusts and scew the world.
Stay honest, protect yourself and the chance of anything happening to your investment should be fine.
If you have the mind power to get totally involved with all the strategies, and the hype, go for it, but in the majority of cases it realy isn't neccessary.
Trusts are just a product that gives someone else income .
Half way through my investing career, i also got sucked into the trust hype. It made me scared, and I lost too many good opportunities from not being sure of what i was doing. I set up a trust after reading just about every book, and website, because i was sure that i was doing things wrong.
The trust is still there. Never been touched. Sure, now towards the end of the time, i would like some of my Ip's in there. just in case i kick the bucket, and to make it easier for my kids, but I figure they will be happy with what ever they get, give or take a bit of CGT. I have made sure that they won't be relying on the handouts, by educating them about property and making them investors themselves, and pretty damn good ones at that.
An other friend, also caught up in the trust hype, set it up for her 2nd ip. Didn't turn out real good-she had to sell at a loss and now has the loss stuck in there for a long long time. She could have used it against her income a lot more.
Of course there will be many stories of how many of you saved this and that, but you have to get there first, and then decide how much further you want to go, to make it realy worth while.
So my advise/advice stands, i am afraid. Average people, -work, save and buy, insure, and hold as long as you can.( with, of course all the general advice regarding property taken into the grey matter)
You can realy make it as easy or as difficult as you want.
Piston broke, me thinks I may know a little about investing, just a little, and I have shared for many years. Forget about trusts, is my opinion. I have done it, i am not a stressed out, money hungry, wheeler and dealer, just an average person who has lead a pretty fine life, without a trust.
Sure, trusts have their place, but I am merely trying to tell the beginners that buying your first couple of IP's should not be that difficult. AVERAGE People can get bogged down with all the supposed crap that is associated with investing.An investor who has one or three ip's, and plans to hold them, has other income, a stable home life, should not have some idea that they have made mistakes because they are "trustless'. I have met too many younger ones, who are keen, but just don't have either the mental capacity or the time, to "set up" all the right entities to keep their money "safe" or " minimize tax" or whatever other reason . This idea can keep them from starting in the first place. tell them it is as easy as working hard, saving and buying.
If they then turn into moguls, the "trustless' ip's realy wont matter that much.
How many times do you see beginners on here trying to get their heads around how to set up the right trust etc etc? Waste of time. Just go out, when you can, and START.
If you run a business- pay your insurances, pay your public liability. It is all tax deductable. If you rent out your houses, pay your insurances. If you get divorced, they will still get your trust anyway, unless you are an unscrupulous ***** facing bankrupcy,who wants to protect his investments at the cost of all the creditors who, by rights, should be paid anyway( and we see plenty of that happening every day, Storm anyone, defunct builders, anyone?)And i am NOT saying that everyone who files for bankrupcy is unscrupulous, but many of the big players are. They can hide in their trusts and scew the world.
Stay honest, protect yourself and the chance of anything happening to your investment should be fine.
If you have the mind power to get totally involved with all the strategies, and the hype, go for it, but in the majority of cases it realy isn't neccessary.
Trusts are just a product that gives someone else income .
Half way through my investing career, i also got sucked into the trust hype. It made me scared, and I lost too many good opportunities from not being sure of what i was doing. I set up a trust after reading just about every book, and website, because i was sure that i was doing things wrong.
The trust is still there. Never been touched. Sure, now towards the end of the time, i would like some of my Ip's in there. just in case i kick the bucket, and to make it easier for my kids, but I figure they will be happy with what ever they get, give or take a bit of CGT. I have made sure that they won't be relying on the handouts, by educating them about property and making them investors themselves, and pretty damn good ones at that.
An other friend, also caught up in the trust hype, set it up for her 2nd ip. Didn't turn out real good-she had to sell at a loss and now has the loss stuck in there for a long long time. She could have used it against her income a lot more.
Of course there will be many stories of how many of you saved this and that, but you have to get there first, and then decide how much further you want to go, to make it realy worth while.
So my advise/advice stands, i am afraid. Average people, -work, save and buy, insure, and hold as long as you can.( with, of course all the general advice regarding property taken into the grey matter)
You can realy make it as easy or as difficult as you want.
Trogdor, sometimes too much information can be a burden rather than a god sent.
And as for the mower analogy- well to a toddler with $2 in his pocket, and no yard to mow, that ride on would seem WAY out of his league. He would have to do some hefty growing before he could even hop on , let alone afford it, let alone need it.
this is rose colored glasses stick your head in the sand stuff.
trusts are cheap and simple and incredibly powerful tools. If you have the frame of mind that trusts are too expensive and bothersome then take the same approach with your insurances, don't bother and she'll be right. bad things only happen to bad people right?
yes very cheap, my HDT only cost $2700 to set up, each year $1500 for tax return and thousands in extra NSW land tax ?!!! Now the accountant who set it up washes his hands off. All the claim about asset protection is highly questionable.
Probably going a little far, but you could almost change the original posters sweeping statements on trusts to read HDTs!!!
I think you'll find DTs and UTs a lot cheaper to set up and run (and dont have the risk of the ATO ruling against you).
Point taken about the NSW land tax though!! Lucky im in Vic.
