trials of finding a good accountant



From: Anonymous

Hi all,

For months now I've been reading numerous investment books (including dale's tax battles manual) and surfing through this forum. I decided I need a good accountant and for the last 2 weeks have interviewed 2 in sydney (where I live). Based on my reading so far and info I've gained from this forum, I've asked both accountants questions along the following lines to see if they're right for me:

1. Do you personally own investment property?
2. What do you think about a family trust for my wife and I?
3. Did you know that offset accounts are useful tools in that they don't ruin the tax deductible amount of an investment loan when you withdraw money from the account for personal purposes?

The accountant I saw yesterday threw me for a loop. He knew about the benefits of an offset account, which was good as the first one kept telling me I was wrong on that point. But he quite proudly told me that he himself didn't own any investment property whatsoever. Then he told me that my interest in using a family trust was misplaced.

My wife is soon to be a doctor, and I am an engineer (on highest marginal tax rate). So he kept saying that we should just invest everything in my name as I am unlikely to ever be sued but my wife is certainly at a higher risk. When I asked him what happens when any negatively geared properties start to become positively geared (and hence I lose the tax deductions), he just said to borrow more money to become negatively geared again. (I'm still thinking through this one...any comments from anyone?)

We're not sure if we want children. So he said that if we never have children, and we're both eventually going to be on the highest marginal tax rate, then there really isn't anyone to distribute the money to with a trust in order to minimise tax. Which I suppose is true (please correct me if I am wrong).

But then again, what happens when we've accumulated heaps of investments in my name only, and it comes time for us wanting to retire on the passive income from those investments. Won't I be heavily taxed then, with no way to distribute money to my wife to reduce tax? But this accountant I saw yesterday said that at that point we then create a trust. I asked him about the costs involved in transferring assets into the trust, and he acknowledged there'd be stamp duty etc to pay, but didn't elaborate any further. He also told me that a trust would mean I would need to pay land tax straight away (which I know is true) but without investing through a trust we could avoid this for a while at least (admittedly I'm not sure about that one).

basically, his main argument was that is was much cheaper to achieve the protection beneftis of a trust by simply investing only in my name, and that the tax minimisation benefits to be gained from a trust were negligible for my wife and I. He seemed to suggest a trust is only worthwhile when you've got a chunk of money all at once. eg, he said he set up a trust once for a client because he won a million dollars in lotto. I think he was trying to tell me that trusts were only for the wealthy. He seemed to completely miss the point that the intention of my wife and I WAS to be wealthy one day, even though we're just starting out at the moment. And he also quite proudly told me that he doesn't have a trust but just puts all of his investments in his wife's name (shares and managed funds only) and into his superannuation.

Please, can anyone tell me of a good accountant in sydney??? Anyone with any comments about what this accountant has told me??? I'm a bit angry as my wife (who hasn't done all of the reading on investments that I have) is really against the idea of using a family trust now.

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Reply: 1
From: Mark Laszczuk

I strongly suggest you email Dale personally and refer your situation to him. It doesn't matter if you are in Sydney and he is in Melbourne. He can work just as effectively for you from there as someone around the corner. Besides, plane fares to Melb. from Sydney would be pocket change for you guys on your salaries. You can email him at: By the way, I can confidently recommend Dale, as he is my accountant.

'no hat, some cattle'
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Reply: 2
From: Mike .

"When I asked him what happens when any negatively geared properties start to become positively geared (and hence I lose the tax deductions), he just said to borrow more money to become negatively geared again. (I'm still thinking through this one...any comments from anyone?)"

Ethan, you do not lose your tax deductions because a property is positively geared. A tax deduction is an allowable expense incurred by you which is subtracted from your gross income to calculate your taxable income. I think what you meant to say was that you would lose the tax benefit of Negative Gearing which allows you to offset a loss (when expenses exceed rent) against other (job) income.

It seems to me that if you are concerned about losing the benefit of Negative Gearing then you shouldn't place your properties in a trust if you think they will be negatively geared because the loss is quarantined to be offset against rent in future years. That means the loss is rolled over until such time that the rent exceeds the accumulated loss.

A Trust is more useful for tax minimisation when the properties are positively geared and you want to distribute the income to the lowest income earner as their rate of tax is lower.

If you intend to purchase growth property at retail prices then you will most likely be negative geared. In this case, your wealth creation will be slowed if the property is held in a Trust because you won't be able to lower your taxable income in order to get a better refund. A refund which otherwise could be used as a deposit on another property.

On the otherhand, if you purchase growth property at wholesale prices, they will be positively geared much sooner and, in this case, a Trust will work in your favour to distribute income in order to minimise tax.

If you feel that your wife will be on a lower tax rate initially then I would recommend the latter option. A Trust will also allow you to share the rental income equally when you retire which will help minimise tax.

Regards, Mike
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Reply: 2.1
From: PT Bear


Where are you based? Most people here are happy to recommend a good accountant, but they need to know where you need to find one.


"Have fun, be successful, make lots of money, be someone who makes a difference, and above all else, don't forget the view."
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Reply: 2.2
From: Richard Hunt


Your comments suggest that you may be going down the negative geared property road and if so, a trust structure is not the most tax efficient, particularly in the short-term with the losses trapped in the trust.

However, you need to weigh this up against the benefits of asset protection that a trust provides and the ability to both split the net income between beneficiaries when the trust finally derives a net income from its renting activities and also split any capital gains when properties are sold.

For many property investors the deferral of any tax benefit to a time in the future when property/s held by the trust become positively geared is too long a horizon to justify a trust structure.

Be mindful though that there may be opportunities available to you and your wife to shorten this horizon that are not available to other investors. You see, as a doctor your wife may well ultimately provide her services through a standard professional practice company/service trust structure. This may provide you with the ability to distribute income from her service trust directly to the IP trust to "soak-up" the IP trust losses much earlier than would otherwise be the case if you had to wait for the IP's to go positive geared.

I would suggest you seek professional advice from an accountant who both understands the specific issues faced by doctors in conducting their profession and one who also understands property investment.

I can recommend Vince Lagana, a Partner with Bongiorno & Partners, a firm that specialises in providing professional accounting/tax services to the medical profession. Vince is ex-Big 4 and an active property investor and developer.

He is located at Edgecliff and his phone number is 9326-2788.

Good luck!

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Reply: 3
From: Rolf Latham

Hiya Ethan

We have in excess of 1000 "clients", 200 of which are what I would call serious property investors.

My suggestion based on my interpretations on client feedback is to choose your accountant/tax advisor from someone that is relationship and not transaction based. Someone that takes an actual emotional interest in how you are getting on. Someone that has empathy with your goals, dreams and challenges.

While the technical expertise is very important a relationship based advisor will find out what he/she needs to serve you best.

I would also recommend an annual tax paid deductible trip to Kilsyth where Dale practices based on feedback from many clients.

There is real care and interest there !

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Reply: 3.1
From: Anonymous

Hi everyone,

Thank you all for the comments and advice. It's amazing how much one can learn from this forum for just the cost of dialling in to access the internet.

Richard, thanks for giving me Vince's name and details. I'll give him a call and make and appointment. Failing that, I'm going to try to convince my wife to fly to melbourne for a holiday, and while we're there just say hello to a friendly accountant.

Thanks again everyone.

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From: The Husband

One more good point with a trust. Even if you never have children and are both on the top tax bracket, you could then set up a company and have the trust distribute to the company and pay a max 30% tax. You could do this later on when needed. it only costs $800 to set up a trust, I think it is worth it.

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From: Dionysus888 .


'So he kept saying that we should just invest everything in my name as I am unlikely to ever be sued but my wife is certainly at a higher risk.'

Who knows what the future will bring. What if you cause damage to somebody or something and you get sued personally or down the track you decide to go into business and the business gets sued, just because you are unlikely to get sued at the moment in your position as an engineer does not mean there is no risk of exposure to legal action at some point in time and think about the capital gains tax payable as well as stamp duty upon transfer of assets down the track. Also all future rental income will be taxed at your rate when you retire with no way to income split. Just some things to think about.


You're not drunk if you can lie on the floor without holding on. ... Dean Martin
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