I have just subscribed to this forum after reading some very interesting threads and posts. There are certainly many knowledgeable people out there. I was on the verge of setting up a HDT and have decided against it for reasons which will follow below. The threads dealing with this clearly suggest much angst and uncertainty. The re-assurance is not convincing because it almost always comes from a small group of promoters who obviously swear by the concept. In reality, the HDT structure is NOT unknown to the vast army of lawyers and accountantrs out there. I've spoken to accountants from some of the city's top firms and they've given short shrift to the concept. Many highly skilled practitioners are aware of the structure yet choose to avoid it. How is it in a country which has lawyers and accountants numbering more than 30,000, that you would be hard pressed to find more than a dozen sold on the idea? I read somewhere that a particular firm does 50 such structures a month. Well, that alone equates to over $1 million of recurring revenue EVERY YEAR... Food for thought, but I won't digress Ignoring the asset protection issue in this post (I believe the UT part negates the asset protection anyway), the HDT concept would clearly satisfy the ATO definition of a 'scheme' in relation to Part IVA. Why? Well, the investor has a hand in all aspects of the structure and his/her dealings with the UT and/or HDT are certainly not at arms length. Nobody on this forum would argue in fact that this is not a contrived arrangement. In an example where property is purchased for say 500k, the investor acquires units entitling him/her to all the income relative to the 500k property ie. ALL the trusts assets at the time. Now the often touted advantage of the HDT is that all the income (less trust expenses) can be streamed to the unit holder, thereby allowing him/her to negatively gear. In this example assume the investor incurs 35k interest and receives 16k pa in income, allowing a healthy tax break. The ATO, lining up its ammunition, would point out that even if the investor enjoyed rental increases averaging 5% pa, it would take over 22 years for the 'investment' to break even... Mmm, the court would wonder (using the reasonable man test), was that commercially viable or tax driven? It is then said that when the investor wants to sell the property, the income units are first redeemed (at potentially $1 per unit (!)) and the Trustee may then allocate the ensuing capital gain to the lowest tax beneficiary. This achieves Nirvana for property investors - the highest income earners gets all the tax breaks and the lowest income earner enjoys the capital gain. WELL REALLY! A court will almost certainly examine (in the context of the 'scheme') the acquisition of the units i.e 500k purchased units worth 500k. With the corresponding rental increases, the value of those units would have to increase accordingly, arguably in line with the value of the property. How, the court would want to know, could 500k be effectively paid for units in a trust whose sole asset is a property worth 500k, without in fact effectively acquiring a capital interest in that property? (Remember, in looking at a contrived 'scheme', what your trust deed says, no matter how fancy the language, CAN AND WILL be 'looked through' by the court, except in genuine arms length transactions). Further, it is conventional wisdom, certainly in the metropolitan centres that nobody invests in residential property for the income - it's all about capital growth. Try explaining to a court the commercial viability of paying 500k for units in a UT which only owns a property worth 500k AND giving up the only upside - the capital growth. Good luck with that one. Now, the HDT has apparently been around for a few years. It is not yet on the ATO radar because it doesn't (yet) present a threat to the fiscus. Why? Well, the 'problem' with the HDT only arises LATER, when the properties are sold to realise gains and so far not many such sales have occurrred or not enough for the ATO to wheel out the big guns. Knowing the machinations of the ATO, I feel certain that the big guns WILL be wheeled out in due course and then there'll be a lot of people running for cover. There is no established case law on the subject nor any ATO Public Product Rulings or Tax Determinations. In other words, investors have no precedent to rely on. Now you may have heard about Private Tax Rulings on the matter but that should not reassure you at all. Those rulings ONLY cover the party who applied for it, even if the ATO changes its position later. Private Rulings are purely a construct of the law designed to give individual tax payers certainty in their dealings. It is NOT to be used as authority for any proposition. In fact, many private rulings are given as a matter of convenience to satisfy individual taxpayers at a particular moment in time and the ATO often issues Public Determinations which differ markedly from Private Rulings. This is a view I have formed after much investigation and analysis. No matter how diametrically opposed views on this may be, the ultimate arbiter has to be the ATO at some point in the future - not a good position to be in if you're after peace of mind!