Hybrid Trusts

From: Kim Heaver

I spoke to my accountant about setting up a hybrid trust, she said there had been some mention that the ato was looking into them and may seek to apply part 4a (anti avoidance)to stop negative gearing.
Does anyone have any more info or opinions?
Being able to negative gear against the trust would seem to be the main benefit of a hybrid trust, if the ato sees that as avoidance and disallows it, it would defeat any advantages over a normal discretionary trust.
Also has anyone had any further info on the issue of asset security not being quite as good as a discretionary trust.

Thanks in advance,
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Reply: 1
From: Dale Gatherum-Goss

Hi Kim

The ATO have not issued any such advice at all, as far as I have heard. I receive weekly bulletins from them and others and no such warnings have been forthcoming.

Can your accountant direct you to why he/she thinks this?

have fun

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Reply: 1.1
From: Even Steven

Did I just hear you say that one can hold their properties in a trust and still claim negative gearing? Presumably one can only claim the loss against other income in the trust, not against, say, personal salary.
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Reply: 1.1.1
From: Dale Gatherum-Goss

Hi Steve

Yes, you did hear right and yes, the losses from negative gearing can be used to offset against your salary as this is the "magic" of a hybrid trust.

There are, as always, other issues to take into account and the asset protection does not appear quite as good as under a traditional family trust, but, the possibilities look good.

Have fun

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