We Agree with Julia

[coastymike]

Julia,

Just read your strategy re the holding of property as tenants in common with husband, wife and discretionary trust and agree with your views as a minor adaption is what we have also been using for the past six months following the ATO decisions re hybrids and although we think will be ok always better to go with an even safer option.

The minor adaptation we have made is that the unit trust holds the property and the units are held jointly by the husband, wife and discretionary trust. The same salary sacrificing strategy re the discretionary trust being associate of the husband and wife and FBT and Part IVA not applying. The major advantage we see from this is that the property can be transferred to an SMSF at a later stage which would otherwise not be possible if the property was held in any proportion by the husband, wife and DT. Altogether though we seem to be aligned in our strategies. Clients are recommended to apply for a PBR but we have a draft one available so you just fill in the blanks and send it off.

 

[davea]

Thanks for providing your opinion Mike....

Just clarrifying though, i did read that you cant transfer property from an associate to your SMSF. Now i must say ive read conflicting advice on this but i am interested to know if you have any reference or something showing this is ok.

Additionally, is there a reason why Part IVA doesnt apply? There seems to be no commercial benefit to do this except to increase the taxable income in the trust. I think its a great strategy and have read 77937, but it says nothing about Part IVA. Id be interested in hearing your opinion on this...

It does leave open the risk of future legislation change as if this becomes widely used i doubt the ato would be to happy and will eventually try and shut it down like they have done with HDTs

 

[Rolf Latham]

Hiya Coasty

I do like the PBR approach !

For some reason, some financial/tax/asset protection people prefer their clients NOT to get one ..............A PBR seems like lock nut material to me

ta
rolf

 

[geoffw]

Just clarrifying though, i did read that you cant transfer property from an associate to your SMSF. Now i must say ive read conflicting advice on this but i am interested to know if you have any reference or something showing this is ok.

The rules have always been that the transactions for an SMSF must be kept completely away from the business.

 

[twodogs]

Hiya Coasty

I do like the PBR approach !

For some reason, some financial/tax/asset protection people prefer their clients NOT to get one ..............A PBR seems like lock nut material to me

ta
rolf

But having the PBR cover Part IVA would be advisable too, I was surprised not to see in the 77937 ruling.

 

[JIT]

Coastymike,

Would the UT and DT each need their own company as a trustee?

How much more expensive would this structure be than the HDT alone, to set up and to run?

 

[nonrecourse]

must be a business/commercial property

Thanks for providing your opinion Mike....

Just clarrifying though, i did read that you cant transfer property from an associate to your SMSF. Now i must say ive read conflicting advice on this but i am interested to know if you have any reference or something showing this is ok.

Additionally, is there a reason why Part IVA doesnt apply? There seems to be no commercial benefit to do this except to increase the taxable income in the trust. I think its a great strategy and have read 77937, but it says nothing about Part IVA. Id be interested in hearing your opinion on this...

It does leave open the risk of future legislation change as if this becomes widely used i doubt the ato would be to happy and will eventually try and shut it down like they have done with HDTs

Hello davea; You can transfer business property from an associate to your SMSF you just must ensure that you have independant valuations. The no no is transfering residential property from an associate.

Regards

Nonrecourse

 

[davea]

on this...

It does leave open the risk of future legislation change as if this becomes widely used i doubt the ato would be to happy and will eventually try and shut it down like they have done with HDTs

Hmmm Legislation risk....

unfortunately this option has gone bye bye with tongihts budget....

Now to wait for the next creative idea by an accountant....

 

[allblack]

Hmmm Legislation risk....

unfortunately this option has gone bye bye with tongihts budget....

Now to wait for the next creative idea by an accountant....

Exactly the reason why accountants shouldn't get to creative!!. What happens now to couples who purchased 99% in lower income earners name and 1% higher income earners name with the intention of salary sacrificing. From next year they won't be able to salary sacrifice the rent expenses. Result, all the losses with the lower income earner.

 

[julia]

It is possible that there will be no stamp duty costs in bringing the property up to 50:50 if it is owned by a husband and wife, at least that is what I understand regarding NSW. You would have to ask the particular stamp duty office in your state. They will give you a ruling on how it will be treated before you go ahead.

 

[davea]

Hi Julia,

could you just quickly explain that again please...

is it because your purchasing it off a related party that you wouldnt have stamp duty? I thought you could only buy the original amount off the partner to be exempt from stamp duty in nsw? so if there is a 3rd person as well there % relates to the rollover releif?

 

[julia]

davea,

I got this info from a solicitor, not my area of expertise. She seemed to think as long as the transaction involved spouses it was worth apply to the stamp duties office to see if you qualified for the exemption.

 

[Pat]

If you bring the property to 50/50 in Victoria there will be no stamp duty.