Setting up a Discretionary Trust in Perth.
- Thread starter tropic
- Start date
I found an accountant that helped my neighbour with their trust.
One of the things that he said about beneficiaries like children is that their names do not have to be mentioned in the Discretionary trust.
Simply by saying that the children are beneficiaries is enough.
The same with sisters and brothers.
Are these correct.
The cost seems reasonable from what I can find in this forum. It's $550.
One of the things that he said about beneficiaries like children is that their names do not have to be mentioned in the Discretionary trust.
Simply by saying that the children are beneficiaries is enough.
The same with sisters and brothers.
Are these correct.
The cost seems reasonable from what I can find in this forum. It's $550.
Sounds right in terms of the beneficiaries. Usually there are named beneficiaries (John and Mary Smith), and then the trust deed will mention children, brothers, sisters, grandchildren, companies of which they are directors, etc thereof.
Obviously, this is so that the class of beneficiaries will include future spouses and children yet to be born.
Obviously, this is so that the class of beneficiaries will include future spouses and children yet to be born.
google "trust magic" and buy it - seriously, the best read on discretionary trusts.
for WA try Brett Davies Lawyers: www.taxlawyers.com.au
Regarding "Trust Magic", does it explain and has example of financial statement, journal entry & book keeping?
I have 2 books about Trust and they don't have examples.
Thanks.
Hi Tropic
Sounds like you need to look into a book on accounting rather than trusts for those. From memory, Trust Magic doesn't cover these.
Tropic, If you have just 1 or 2 properties you just need to open a Trust bank account and put all transaction relating to the Trust property through that bank account. If the property is managed get an annual rental summary. Also bank loan statements. Take this in to your accountant at end of year. Cost should be around $500-$1000 for up to two properties. This is for the Trust financial accounts, tax return and minutes. There is no way you can learn bookkeeping and preparing financial statements just from reading a couple of books.
What's the structure Wunderbar?
Unless there is income being injected into the trust to soak up the losses, I can't see how it could be done?
It's a bit complicated but it can't happen for a pure discretionary trust. It has to be a unit trust.
Basically what happens is you borrow money from the bank in your personal name. You then 'invest' this money in the trust, who then uses the proceeds to buy the property. Since it's an investment that you're paying interest on, the interest is tax deductible. The trust itself receives rental income, which it then distributes to you - hence the negative gearing.
Basically what happens is you borrow money from the bank in your personal name. You then 'invest' this money in the trust, who then uses the proceeds to buy the property. Since it's an investment that you're paying interest on, the interest is tax deductible. The trust itself receives rental income, which it then distributes to you - hence the negative gearing.
The benefit lies in the ability to split the trust into income units and capital units. Capital units can be given to those on low income to minimise CGT - whereas income units can be given to those who earn high incomes for negative gearing. It's quite flexible.
Oh and you can borrow money using a unit trust - you can't do it with a discretionary trust.
Oh and you can borrow money using a unit trust - you can't do it with a discretionary trust.
I would suggest that if a unit trust purchases a property, funded through the issue of income units to X, and X borrows the full amount to purchase the units, and capital units are issued to Y, interest deductions would be denied to the extent they create an income loss for X. So no negative gearing for that structure.
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Wunderbar, the ATO don't see it this way. I suggest you contact your accountant to get some "up to date" advice.
I went to see an accountant to discuss about the DT.
What is considered as a reasonable hourly rate for an accountant?
He is a CPA, runs his own business and charges $220/hour.
I saw him for 45 and he is charging 45 minutes. I didn't know I thought it was part of the deal of forming a DT. But anyway that's fine.
Is $220/hour for a CPA and $175 for his assistant sound reasonable?
I'd like to be able to charge $220/hr for me work!
He also suggested to have the trust beneficiaries limited to immediate family ie. parents, children, siblings and (future) grandchildren.
While some websites suggested to have the beneficiaries as wide as possible.
Not sure the pros and cons except for the obvious.
What is considered as a reasonable hourly rate for an accountant?
He is a CPA, runs his own business and charges $220/hour.
I saw him for 45 and he is charging 45 minutes. I didn't know I thought it was part of the deal of forming a DT. But anyway that's fine.
Is $220/hour for a CPA and $175 for his assistant sound reasonable?
I'd like to be able to charge $220/hr for me work!
He also suggested to have the trust beneficiaries limited to immediate family ie. parents, children, siblings and (future) grandchildren.
While some websites suggested to have the beneficiaries as wide as possible.
Not sure the pros and cons except for the obvious.
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