What would you do?

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From: Dave :)


Hello fellow IP freaks!

I'd like to get as many opinions as possible on this one. A good friend of mine is in the extremely enviable position in that he has recently won first division in a lottery. His winning are almost spot-on $1,000,000.

This lucky bastard (hehe..sorry Jase!) is in the highest tax bracket, so expects much of this to be swallowed by the ATO. What would you guys and gals suggest he do, using a Property Investment strategy, to minimise the tax he pays of his winnings?

He currently has one IP in Ascot Vale - owes $110K and worth $190K and has a $440K mortgage on his $550K warehouse home.

My first thoughts would be to purchase several, well located off-the plan/brand new properties that would give him a stack of tax deductions...and maybe pay the interest for all of them in advance. This strategy obviously has it's flaws and I'm sure he has many options available to him.

I'm trying to prevent him from just accepting the fact that the ATO will get it's 48.5% no matter what he does.

What should he do?

Thanks for your time and input in advance,

Dave (wishing he'd gone 50/50 in that damn ticket..)
 
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Reply: 1
From: The Wife


geeze mate, if he were to LOAN the money to his trust and not earn interest on it, i think he may avoid tax...says me the NON accountant! but in all honesty, tell the man to spend some money on 6 different tax accountants point of view, and get some stuctures in place.


~Life is a daring adventure, or nothing at all~
 
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GoAnna!

GoAnna!

Reply: 2
From: GoAnna !


Has he checked that lotto winnings attract tax? I thought they were windfalls and there no tax. But I have no experience in winning lotto so i may be wrong. : (

Before all else...pay out home.

GoAnna !
(aka Anna before she got real)
 
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Guest
Reply: 2.1
From: Dave :)


I'm not sure, GoAnna...he just assumes, as I do, that his winning
attract tax.
I think he should find out...hehe...derrr!!

:)

Dave
 
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I

IanF

Reply: 2.2
From: Ian Findlay


I agree with GoAnna,

Pay off all non-deductable debts, including credit cards/car loans etc if he
has any.
Then use the $560k he has left as 25% (rather than 20% just in case) to buy
good solid newish (2-3 years old) IP property. He should easily be able to
get around $2,200,000 worth of property - perhaps 10 units at $220 each or 5
units and some houses. Up to him.

Last of all his best investment of all - take you out for a slap up meal at
least for giving him all this good advice!

Ian

-----Original Message-----
From: propertyforum Listmanager
[mailto:listmanager@bne003w.webcentral.com.au]
Sent: Friday, 11 May 2001 10:42
To: Recipients of 'propertyforum' suppressed
Subject: What would you do?


From: "GoAnna ! __" <anita@overlink.com.au>

Has he checked that lotto winnings attract tax? I thought they were
windfalls and there no tax. But I have no experience in winning lotto so i
may be wrong. : (

Before all else...pay out home.

GoAnna !
(aka Anna before she got real)



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W

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Reply: 2.2.1
From: Dave :)


Thanks The Wife, Ian and GoAnna!

I agree with you regarding paying off his debts first..which is what I
told him to do. Can you believe he wanted to first buy himself a
$100,000 car and go on a holiday to Europe??? Geez, why do all the dumb
people get all the luck!!

On top of the meal I'll get from him, I should source his IP's myself,
buy them at a discount, which I've had some experience with, and get a
kickback from the vendors/developers!! (ooops, I feel I'm about to be
hunted down and investigated now..) That'll help me regain some lost
sleep after not going half/half on the ticket...plus, he is a Carlton
supporter, so I won't feel too bad. *grins*

Cheers,

Dave
 
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WebBoard

Guest
Reply: 2.3
From: The Wife


his winnings should only attract tax if he earns anything of them.
~Life is a daring adventure, or nothing at all~
 
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WebBoard

Guest
Reply: 2.3.1
From: Day Dreamer


My understanding is prize money from lottery does not incur taxes.
 
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M

Marina

Reply: 2.3.1.1
From: Marina. L


Tattslotto is my Business. Check out my website on how you can play in 3 major Australian draws for only $12.50, 6th number is guaranteed. If you double click on my name it will get you there.

All tattslotto winnings are TAX FREE, I repeat TAX FREE.

Any earnings however from the prize money are taxable.

What to do with the money david? I could think of 101 things!




MARINA
 
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duncan_m

duncan_m

On ya bike.

Reply: 2.3.1.1.1
From: Duncan M


On 5/11/01 11:26:00 AM, Marina. L wrote:
>Tattslotto is my Business.
>Check out my website on how
>you can play in 3 major
>Australian draws for only
>$12.50, 6th number is
>guaranteed. If you double
>click on my name it will get
>you there.

Thanks, I'd rather spend the $650pa on 20 good finance/investing/money books.

Frankly I'm suprised you chose this forum to market your wares that are aimed squarely at the financially illiterate mass.

Duncan.
 
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M

Marina

On ya bike.

Reply: 2.3.1.1.1.1
From: Marina. L


Duncan,

I have been with this forum for some time and I have never ever advertised anything.Property is my passion, and I do have a number of Ips.I regularly contribute and ask questions.

The only reason I chose to mention this subject is because TATTSLOTTO was the subject, otherwise I would not have mentioned it.

It is up to the individual to have a look and make up their own mind if they are interested.

This is the first and last time i will be mentioning it.



MARINA
 
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duncan_m

duncan_m

On ya bike.

Reply: 2.3.1.1.1.1.1
From: Duncan M


>I have been with this forum
>for some time and I have never
>ever advertised
>anything.Property is my
>passion, and I do have a
>number of Ips.I regularly
>contribute and ask questions.

Thats what I was so suprised :) It'd be like The Wife posting Amway ads or something :)

Duncan.
 
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W

WebBoard

Guest
On ya bike.

Reply: 2.3.1.1.1.1.1.1
From: The Wife


EEEKKKKKK.....i have not now or ever been in amway, not that theres anything wrong with that.
~Life is a daring adventure, or nothing at all~
 
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DaleGG

DaleGG

Reply: 3
From: Dale Gatherum-Goss


Hi

I am a tax accountant and I can confirm that Tattslotto winnings are completely tax free. You do, however, pay tax on any profit that the investments make once you start investing.

As others have said, I would definitely retire any non deductible debt such as the home loan before doing anything else.

I hope that this helps

Dale
 
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WebBoard

Guest
Reply: 3.1
From: Dave :)


Thanks Dale..I appreciate it. Now I just need to convince him to let me
manage his winnings for him....but as to how?? this would start a whole
new thread and I've got a headache.

Cheers,

Dave
 
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paulzag

paulzag

Reply: 2.2.1.1
From: Paul Zagoridis


On 5/11/01 10:58:28 AM, David T wrote:
>told him to do. Can you
>believe he wanted to first buy
>himself a
>$100,000 car and go on a
>holiday to Europe??? Geez,
>why do all the dumb
>people get all the luck!!

Because they need it! The rest of us make our own luck. Funny how the harder I work, the luckier I get.

Of course that work is on wealth building NOT the job.

Dreamspinner
 
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WebBoard

Guest
On ya bike.

Reply: 2.3.1.1.1.1.1.1.1
From: Anonymous


So the BBQ is going to be a sale on cleaners that you can degrease the car with, clean the mouldy bathroom and then wash the dog in.

Send me a invite. I am into anything the crowd wants to follow
 
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Guest
On ya bike.

Reply: 2.3.1.1.1.1.1.1.1.1
From: The Wife


If thats what you think anon...shame you couldnt say it with a name.


~Life is a daring adventure, or nothing at all~
 
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R

Rolf Latham

Reply: 4
From: Rolf Latham


Hi david

Its not income - so theres no income tax

Its not capital cap gains so no cap gains tax

Its not co tax, so company tax

Its not a service and a its not a good so theres no capital.

No one's died so there no death duty

No consumption of petrol, tobacco or beer or wine, so theres no excise.

Id say this mythical winner is a winner - no tax at all I think.


Rolf
 
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Reply: 4.1
From: Rasputin .


$1mill is not enough to reitre on but its a good start...
 
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