Why don't big firms sell HDTs?

in that case, you're probably correct in your adjustment of the split, as effectively the units own proportionally fewer of the income producing assets.

although whether or not you can do a zero interest loan (for tax purposes) is probably another question ....
 
bort said:
although whether or not you can do a zero interest loan (for tax purposes) is probably another question
I would think that if the funds are your own personal after-tax money, then you can do what you like with them. The issues arise when you're trying to claim some sort of deduction or whatever.

GP
 
I would think that if the funds are your own personal after-tax money, then you can do what you like with them. The issues arise when you're trying to claim some sort of deduction or whatever.

GP
Exactly. The funds are not borrowed and I'm not trying to claim an interest deduction so it doesn't concern the tax office.

Thanks for the replies.
 
Rob Balanda on HDT

Rob Balanda deals with the issue of CG and income that may arise from the IP held in the HDT by issuing capital and special income units as follows:


"One beneficiary can hold the income units and effectively claim the negative-gearing loss as a tax deduction in their personal tax return and another party can hold the capital units.

If the property eventually becomes positively geared and makes a profit or is sold for a capital gain then the profit or capital gain can be distributed to the other unit holder (the capital unit holder). Hybrid trusts therefore are the most flexible structure that can be used and have all the advantages of unit trusts and discretionary trusts. However because they're a combination of the two types of trusts they also have the disadvantages of both trusts and they are expensive. Sometimes they can be very expensive, particularly where a family trust needs to be set up as well to hold the capital units in the hybrid trust to give maximum flexibility. The costs can often be double the costs of acquiring a company and establishing a family trust and the continuing costs are much greater as well."

It seems a different approach from DGG, who treats both CG and positive operating profit as income to be distributed to the holders of the special income units. I wonder has anyone tried Rob's approach or similar? :confused:

F
 
Francesco, I believe you are talking about a Hybrid Unit Trust. Dale talks about Hybrid Discretionary Trusts. There are many types of hybrid trusts out there.
 
HI Francesco

MRY is right. Rob Balanda is talking about a different type of trust to the one that we use and recommend. I have some concerns about Rob's treatment of CG being different to income.....However, he must have done his own research and come to his own conclusions to do it this way.

Dale

Rob Balanda deals with the issue of CG and income that may arise from the IP held in the HDT by issuing capital and special income units as follows:


"One beneficiary can hold the income units and effectively claim the negative-gearing loss as a tax deduction in their personal tax return and another party can hold the capital units.

If the property eventually becomes positively geared and makes a profit or is sold for a capital gain then the profit or capital gain can be distributed to the other unit holder (the capital unit holder). Hybrid trusts therefore are the most flexible structure that can be used and have all the advantages of unit trusts and discretionary trusts. However because they're a combination of the two types of trusts they also have the disadvantages of both trusts and they are expensive. Sometimes they can be very expensive, particularly where a family trust needs to be set up as well to hold the capital units in the hybrid trust to give maximum flexibility. The costs can often be double the costs of acquiring a company and establishing a family trust and the continuing costs are much greater as well."

It seems a different approach from DGG, who treats both CG and positive operating profit as income to be distributed to the holders of the special income units. I wonder has anyone tried Rob's approach or similar? :confused:

F
 
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