What classifies as expenses for family trust?

Hi,

I have just set up a family trust. What classifies as a taxable expense for the trust?

I have bought a property in my own name and will be doing some renovations on it - if the builder gives me an invoice under the name of the trust, can I claim it as an expense? My accountant seems to think so but it seems a bit strange to me.
 
Yes, you can claim it as an expense.

May I ask why you think it a bit strange to you?

Because the property is in my own name and not the trust. Does that mean I can claim any goods or services purchased (as long as the invoice is in the trust name) even if it is not related to helping the trust generate income?
 
Yes, you can claim it as an expense.

May I ask why you think it a bit strange to you?

How can it be an expense? Where is the nexus between the expense if claimed in the trust and any trust income? In any case, some if not all of the renovations would be capital in nature and will have to be depreciated over time, not immediately expensed.

It's strange because you seem to be using different tax laws to the rest of us, Dopey.
 
Your gut instincts are correct, it is strange!

1. That expense is capital and forms part of the cost base of your rental property, it has nothing to do with the trust.

2. Even if the trust bought the property, renovations are capital (unless on revenue account but it doesnt sound like it).

3. If your accountant cant work this out then hes an idiot. If he gave you this advce knowing full well it is inaccurate and wrong than run for the hills, either way you need a new accountant. Just remember when you sign on the dotted line you assume all responsibility for all decisions made.
 
Your gut instincts are correct, it is strange!

1. That expense is capital and forms part of the cost base of your rental property, it has nothing to do with the trust.

2. Even if the trust bought the property, renovations are capital (unless on revenue account but it doesnt sound like it).

3. If your accountant cant work this out then hes an idiot. If he gave you this advce knowing full well it is inaccurate and wrong than run for the hills, either way you need a new accountant. Just remember when you sign on the dotted line you assume all responsibility for all decisions made.

My accountant is also telling me I can claim child minding expense on the trust if I receive an invoice - is that correct?
 
means you are not conducting an enterprise. thus the costs are capital. the costs have nothing to do with the trust. does the accoutnnat realise the trust doesnt own the property??
 
My accountant is also telling me I can claim child minding expense on the trust if I receive an invoice - is that correct?

No.

For an entity (trust, individual, whatever) to claim an expense as a tax deduction, the expense must be connected to that entity earning assessable income.

Your trust paying the child care fees does not earn any income for the trust.

Time to get a new accountant.
 
Look up a forumite from a few years ago by the name of DaleGG. He wrote a book about what can/can't be claimed through a Trust and it is written in plain English. His son, JamesGG, posts here too. You will be able to purchase this book from either one of these posters.

May I also suggest that you look into getting a new accountant as it appears that they may be giving you some incorrect advice.
 
Top