HDT explanation for Dummies???
- Thread starter Shuttergirl
- Start date
julia,
as i say before i no have negative gearing so no hybrid. it was discretionary trust. gifted $10M to trust and it buy property. then about 13 years later it worth $20M. so gain would have been $10M and i would pay $5m plus stamp duty if i transfer from my name to kids.
but i dont as i have mirror trust. and property has no debts so gearing not problem. the salary sacrifice be bad for me. kids not get land which was my wish.
not hybrid so no cgt as no redemption. my english not great but thought this clear.
as i say before i no have negative gearing so no hybrid. it was discretionary trust. gifted $10M to trust and it buy property. then about 13 years later it worth $20M. so gain would have been $10M and i would pay $5m plus stamp duty if i transfer from my name to kids.
but i dont as i have mirror trust. and property has no debts so gearing not problem. the salary sacrifice be bad for me. kids not get land which was my wish.
not hybrid so no cgt as no redemption. my english not great but thought this clear.
Hiya,
I read a PIT deed that was created perhaps eighteen months ago, I think. Maybe a little more. Based on that, Batten's statement was correct, and there were important differences between the deeds. Admittedly, C&N may have updated their deeds since, but, I have not had access to a recent deed so cannot provide an opinion.
I am puzzled about the trust being run from SA when nobody involved in the trust resides there, but, that is another issue for another day.
Of course, I am probably seen to be in competition with C&N as well, so take my opinions with a grain of salt.
With all due respect, I can see at least four things in that list that are not always worth the paper they are written on. Furthermore, I am not sure that at least two of the others are necessarily against HDT's, either.
This is what I was trying to say about two pages of thread ago... I am not sure that there is much to be gained by flogging this horse further.
Cheers
James.
I read a PIT deed that was created perhaps eighteen months ago, I think. Maybe a little more. Based on that, Batten's statement was correct, and there were important differences between the deeds. Admittedly, C&N may have updated their deeds since, but, I have not had access to a recent deed so cannot provide an opinion.
I am puzzled about the trust being run from SA when nobody involved in the trust resides there, but, that is another issue for another day.
Of course, I am probably seen to be in competition with C&N as well, so take my opinions with a grain of salt.
With all due respect, I can see at least four things in that list that are not always worth the paper they are written on. Furthermore, I am not sure that at least two of the others are necessarily against HDT's, either.
This is what I was trying to say about two pages of thread ago... I am not sure that there is much to be gained by flogging this horse further.
Cheers
James.
This quote seems to sum things up pretty well.
Hi James, in my version of the PIT, there are of course clauses that talk about discretionary distribution, but they are all subject to Clause 3.1(a) which states that all income goes to the unit holders while units are on issue. So the deed is only discretionary when units are not on issue. Which is as it should be.
Could you (fully) quote the section that Chris was referring to, and then we can determine whether his statement was taken in context - i.e. did he not disclose the fact that Clause 3.1(a) overrides any other clause relating to discretionary distribution, or was that clause missing from the deed you are referring to?
Cheers, Shadow.
James I think before you start speaking in such an authoritarian way against Mry and the references he quoted you should point out that you are neither a tax agent or university educated in fact 2 years ago you were selling real estate. So just what four things in that list, in your opinion are not worth the paper they are written on and on what basis?
Hiya,
Unfortunately Shadow, as discussed with you via the PM's yesterday, I do not have a copy of that deed anymore and so cannot quote it.
If your deed was issued after the previous model was revised, then all may be well and good... however, I am not in a position to make any judgements.
Julia, I have readily admitted - and will continue to do so - that I am not university qualified, not a tax agent, nor have as much experience as other accountants on this forum. However, most do not hold this against me as I still understand how things work, and why. Practical knowledge is worth much, much more than the theoritcal crap that they teach at university. Play nice, please; there is no need to bring personal aspersions into this argument by referencing my previous career
I also did not mean to offend Mry with my comments above, so apologies to him if he took it in the same manner that you did.
As far as I am concerned, law is provided first by
- case law, then,
- legislation.
Private rulings and tax rulings are simply ATO opinions and are not always correct. University educations, particularly in accounting, are worthless when things get complicated (likewise, a tax agent's license, as this is simply a recognition of the degree and nothing more). When professional opinion is divided, one cannot place value on either side of the argument based on that alone.
Might I also point out that I stated that they are not always worth the paper that they are written on, and did not make an exclusive statement as you tried to imply. Again; play nice, please.
Mry is one of just a couple of accountants that I have a strong level of respect for, and have often referred clients and forumites to his services. So, I do hold him in high esteem, even if we disagree on this particular issue.
Cheers
James.
Unfortunately Shadow, as discussed with you via the PM's yesterday, I do not have a copy of that deed anymore and so cannot quote it.
If your deed was issued after the previous model was revised, then all may be well and good... however, I am not in a position to make any judgements.
Julia, I have readily admitted - and will continue to do so - that I am not university qualified, not a tax agent, nor have as much experience as other accountants on this forum. However, most do not hold this against me as I still understand how things work, and why. Practical knowledge is worth much, much more than the theoritcal crap that they teach at university. Play nice, please; there is no need to bring personal aspersions into this argument by referencing my previous career
I also did not mean to offend Mry with my comments above, so apologies to him if he took it in the same manner that you did.
As far as I am concerned, law is provided first by
- case law, then,
- legislation.
Private rulings and tax rulings are simply ATO opinions and are not always correct. University educations, particularly in accounting, are worthless when things get complicated (likewise, a tax agent's license, as this is simply a recognition of the degree and nothing more). When professional opinion is divided, one cannot place value on either side of the argument based on that alone.
Might I also point out that I stated that they are not always worth the paper that they are written on, and did not make an exclusive statement as you tried to imply. Again; play nice, please.
Mry is one of just a couple of accountants that I have a strong level of respect for, and have often referred clients and forumites to his services. So, I do hold him in high esteem, even if we disagree on this particular issue.
Cheers
James.
I'm not offended, I'd rather be right than educated, qualified and experienced but it would be hard to separate that out.
However, I plan today to purchase a HDT from MGS and draft a private ruling to the ATO on the deed as of today. I will make it clear that I intend to enter the arrangment on the basis that I will derive income from the trust assets so the ATO will have to decide whether my intentions are honest or contrived. That will be the key. We shall see what happens.
If anyone has ideas on what I should be specific about in the ruling, feel free to PM me.
However, I plan today to purchase a HDT from MGS and draft a private ruling to the ATO on the deed as of today. I will make it clear that I intend to enter the arrangment on the basis that I will derive income from the trust assets so the ATO will have to decide whether my intentions are honest or contrived. That will be the key. We shall see what happens.
If anyone has ideas on what I should be specific about in the ruling, feel free to PM me.
Yes, I talk about that in the article I wrote at Point 2. The arms length problem is indeed a problem when it comes to redeeming the units because whatever the market value is, it overrides any amount put on the redemption form.
Anyway, I now have an MGS HDT deed on hand and all the forms associated with it. I have almost put the final touches on the private ruling.
I will ask the ATO -
It will be almost the same as the application for PBR 66298, except I will make it clear via minutes and on the form that my intention will be to produce income. Corporate trustee, $300,000 house, etc. It will also be clear that the rent will increase as time goes by, and the loan will be a principal and interest 25 year loan to state that it won't be negatively geared forever (Ed Chan's argument).
I do plan on buying a house in that range shortly so this is a serious application. If I can get a positive private binding ruling, I'll use it.
As said before, I will be using the most modern MGS deed AND the standard MGS income unit application form from their website as of today which states that
1. The units have a right to income
2. They have no right to capital,and
3. They must be redeemed for at least their cost price. No methodology is spelled out.
Again, that is straight from the website and HDT folder. I'm not quoting the deed here.
Now, if we are all agreed that the MGS deed is superior to the others on the market, and the MGS income unit application is from the same, then there are no problems with the result, correct? No comments about how MGS is probably a shoddy deed that won't past muster? No rigging of the results by asking biased questions? This is a test on HDTs, not on MGS deeds. I am only using the MGS deed since it is what we all agree on.
If you have any suggestions on alterations I should make, such as to the income unit application form, now is your time to do it. I apply on Monday.
Anyway, I now have an MGS HDT deed on hand and all the forms associated with it. I have almost put the final touches on the private ruling.
I will ask the ATO -
It will be almost the same as the application for PBR 66298, except I will make it clear via minutes and on the form that my intention will be to produce income. Corporate trustee, $300,000 house, etc. It will also be clear that the rent will increase as time goes by, and the loan will be a principal and interest 25 year loan to state that it won't be negatively geared forever (Ed Chan's argument).
I do plan on buying a house in that range shortly so this is a serious application. If I can get a positive private binding ruling, I'll use it.
As said before, I will be using the most modern MGS deed AND the standard MGS income unit application form from their website as of today which states that
1. The units have a right to income
2. They have no right to capital,and
3. They must be redeemed for at least their cost price. No methodology is spelled out.
Again, that is straight from the website and HDT folder. I'm not quoting the deed here.
Now, if we are all agreed that the MGS deed is superior to the others on the market, and the MGS income unit application is from the same, then there are no problems with the result, correct? No comments about how MGS is probably a shoddy deed that won't past muster? No rigging of the results by asking biased questions? This is a test on HDTs, not on MGS deeds. I am only using the MGS deed since it is what we all agree on.
If you have any suggestions on alterations I should make, such as to the income unit application form, now is your time to do it. I apply on Monday.
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No. As stated before, the negative gearing aspect is number one. If you can't negative gear them, you might as well use a DT. If you can, I can ask further questions. With regards to redemption, that will require further complicated issues to be dealt with, specifically how you can tie the cost base of the units to the price you paid for them under a methodology that also reasonably explains a redemption value. I haven't seen one yet.
