Minimizing stamp duty/cap gain on transfer

A

Anonymous

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From: Anonymous


Would appreciate feedback from people in the know.

OK here is the idea;

- form a company a buy one property in company name. Pay stamp duty and +/- $1,000 for Co.

- when time comes to transfer property to whoever you sell the company not the property.

- Stamp duty only applies on transfer, so does it apply to the property in this case?

- Capital gains can be legally reduced via various means available to the Co.

Please shoot this to pieces guys, either I am missing something or this has potential for minimizing taxes/duties. I'm sure Dale and Paul Z will have an opinion or two :)
 
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Reply: 1
From: Michael G


Hi,

Do a web search on "bearer shares" :p

Regards
Michael G.
 
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Reply: 1.1
From: Anonymous


Yes, thanks for that Michael, bearer shares have potential and not just for this either :)
 
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Reply: 1.1.1
From: Dale Gatherum-Goss


Hi

I like the concept of "bearer shares" however to the best of my knowledge, we do not have the laws that make them possible in Oz.

There are specific rules that relate to the transfer of shares in a property owning company for Stamp duty purposes. This is so for each state and territory, I am afraid.

I would check the details with your solicitor to establish exactly what costs might be involved in the transfer.

Companies do not benefit from the 50% exemption in CGT either and so you would need to weigh the lost tax savings along with the costs involved with buying and holding a company; when compared to the perceived benefits.

Good try and I do like the way that you think!!

I hope that this helps

Dale
 
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Reply: 1.1.1.1
From: Anonymous


Dale,

I'm fairly sure 'bearer shares' are not possible in Oz, but by having an offshore company and with all that this entails it is.

The costs/numbers are important and I will investigate further.

Thanks :)
 
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Reply: 1.1.1.1.1
From: Shaun Wilkeson


Hi all
Would this be a direction?
Property is owned by company.
Company has X no. of shares and all are held/owned by a discretionary trust.
A & B are both beneficiaries of the trust, then to transfer the property, include C (the new owner) as a beneficiary, and wipe off both A & B as beneficiaries.
The property is still owned by the company, and the company is still held in trust, and as it is a Discretionary trust - beneficiaries can be added / deleted at will.
Just an idea, but i think it holds water.
Cheers
shaunw
 
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Reply: 1.1.1.1.1.1
From: Paul Zagoridis


Damn I've thought long and hard how to answer this and Shaun's post has forced my hand!

Again - This is an area where you absolutely MUST get expert advice. Expert normally doesn't mean your regular accountant. The experts in these areas normally would take your accountant as their client.

While I don't claim to understand various Stamp Duty Acts AT ALL, I have been toying with that idea of adding and removing beneficiaries to a trust.

The idea seems sound BUT needs a legal eagle to make it work right. Also the intent must be additional and beyond avoiding stamp duty/CGT.

The ATO and various OSR's take a dim view of conspiracy to defraud the government. So I often hesitate before puting my more "out there" ideas in a public forum like this one. I don't want a public reputation as someone who pushes the envelope.

However for any of you discussing this with a suitably qualified expert, try this (and report back!)...

What if the trustee were to vest the trust early on application by the beneficiaries AFTER you added the new owner "C" as a beneficiary and removed the old owners "A" & "B"?.

Paul Zag
Dreamspinner
Oz Film Biz is at
http://www.healey.com.au/~paulz
 
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Reply: 1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi

Do NOT add beneficiaries to a Trust under any circumstances!!!

To do so could crystalise CGT and stamp duty in one foul and ugly swoop.

If your trust was created properly, you should be able to automatically include just about everyone related to you anyway as a beneficiary.

Now, one of the ways to circumvent the laws (did I say that publicly??) is to establish a new trust (or company if you must) where one or more of the specified beneficiaries of the first trust are also beneficiaries of the second trust. This way, the new trust is automatically included as a beneficiary of the old trust without you changing the deed and creating a problem.

Good luck, and yes, do seek specialist advice before you do anything.

Dale
 
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Reply: 1.1.1.1.1.1.1.1
From: Anonymous


Thanks Paul and Dale,

I like the way you guys think too. Paul I for one would love to see more "out there" ideas and pushing of the envelope - gotta make the ATO work for our money :)
 
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Reply: 1.1.1.1.1.1.1.1.1
From: Shaun Wilkeson


Hi Dale
I don't quite understand when you say a new trust is established, and the individual is a beneficiary of both -

"establish a new trust (or company if you must) where one or more of the specified beneficiaries of the first trust are also beneficiaries of the second trust. This way, the new trust is automatically included as a beneficiary of the old trust without you changing the deed and creating a problem."

Do you mean the new trust is a beneficiary of the first?, and the individual is a beneficiary of both?

By the way I love theorizing - and exposure to hardened investors like those of you who inhabit this forum, allows advanced self education.
thanx heaps.
Shaunw
 
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Reply: 1.1.1.1.1.1.1.1.1.1
From: Paul Zagoridis


Most modern discretionary trust deeds define beneficiaries specifically but broadly e.g. "Paul Zagoridis and all his children and their children."

That way I don't have to change the deed if I have more children (or if wild oats come back to haunt me ;-) ).

Also the deed specifically includes as beneficiaries those trusts which also have me as a beneficiary (regardless of the trustee). Quite nice really.

And Anon - the ATO don't really work for their money when you push the envelope. They make YOU work for it. They say "nope", you say "see you in court". At least that's my understanding - is that right Dale?

Paul Zag
Dreamspinner
Oz Film Biz is at
http://www.healey.com.au/~paulz
 
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Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Yes, Paul, that is right. Still, I love a challenge and you CAN beat them!

Have fun

Dale
 
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Reply: 1.1.1.1.1.1.1.1.1.2
From: Dale Gatherum-Goss


Hi

Yes, if one of the specified beneficiary's in the first trust is also a beneficiary of the 2nd trust, then the 2nd trust is a beneficiary of the first trust.

Sounds like a Chinese torture puzzle, doesn't it?!

I'm sorry that I was not clear and i hope that this helps.

Dale
 
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Reply: 1.1.1.1.1.1.1.1.1.1.2
From: Dale Gatherum-Goss


Hi Paul!

Yes, most deeds, when written properly and carefully cover your situation nicely. Being a discretionary trust, the trustee retains complete discretion so it won't matter how many of those little dreamspinners come back to haunt you now.

Just a thought though . . . you do know who controls the trustee, don't you? And, the power over the wealth within the trust?

Have a great weekend

Dale
 
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Reply: 1.1.1.1.1.1.1.1.1.1.2.1
From: Paul Zagoridis


Hi Dale

Do you mean the appointer?

I like the trustee having discretion, especially if any little dreamspinners show up asking for money. Not that I know where any of those little blighters would come from (Nella and I met first day of Uni).

On a business trip to Melbourne (to buy that last IP) I realised Nella didn't know anything about our structure. So I called here once I landed and gave simple but clear instructions in case I didn't make it back. I had hell to pay for being so negative when I got back.

The recent tragedy in the US makes me wonder how many trust structures will shortly be under the control of non-family advisors. The Michael Hutchence situation comes to mind. Succession planning is often left too late in the game.

Paul Zag
Dreamspinner
Oz Film Biz is at
http://www.healey.com.au/~paulz
 
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Reply: 1.1.1.1.1.1.1.1.1.1.2.1.1
From: Dale Gatherum-Goss


Hi Paul!

Yes, the appointor, or guardian, as they are also known sometimes depending upon the wording of the trust.

Cheers

Dale
 
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