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 -
Can I claim a full deduction for interest payable on my bank loan under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the acquisition of income units in a hybrid trust?
Can I claim a full deduction for annual interest payable on my bank loan under section 8-1 of the ITAA 1997 in relation to the acquisition of income units in a hybrid trust in the event that the interest incurred on the bank loan is higher than the income earned from the income units?
Will the ATO apply Part IVA against the interest claimed under section 8-1 of the ITAA 1997?
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.