Why trusts / hybrid Trusts ?

Hi, I'm still a bit confused on using trusts to buy IPs. Apart from it being used for asset protection, what are the other advantages? Isn't Land Tax a big factor for not using trusts - No exemption so payable for the whole land value amount?

Mary
 
Hi Mary

The main reasons are asset protection, as yu mentioned; and, income distribution down the track when you are successful.

Say in 20 years you achieve all of your financial goals and have a very impressive property portfolio. Do you want to pay tax on top of your salary? Do you want to have no flexibility with regard to your income or capital gains tax if you sell a property?

When you have strong goals, and plan to achieve them you need to think in tems pf the bigger picture and longer term issues and this is where a trust shines.

Bye the way, the Hybrid trust allows you to have your cake and eat it too, it would seem Short term negative gearing benefits and longer term income distribution flexibility.

After talking to Kevin Munro this morning, I'm almost convinced . . .

Have fun

Dale
 
Hi Dale,

Can I ask who Kevin Munro is and what he said to make you think a little differently about hybrid trusts?

Cheers

John
 
Originally posted by john doe
Hi Dale,

Can I ask who Kevin Munro is and what he said to make you think a little differently about hybrid trusts?
Cheers
John
Hi

Sure, Kevin Munro is a solicitor specialising in tax law (alleged to have taught the infamous Chris Batten even) who recommends the structures to his clients. He does not see the asset protection issues as being a problem and it was someone like Kevin that I was waiting to hear this from.

I have a little more reading and research to do, but, I am virtually convinced.

Have fun

Dale
 
Dale has pointed out in his manual about the ability to be able to distribute a small amount of money ($640K max pa) to your children.

I have children 9 & 13 (aarrrgggh... a teenage daughter!). I had not thought about the longer term though until the excellent articles in the Financial Review. They point out that when (if) your child goes to university and reaches the age of 18, the trust can be paying the child an income which reffectively comes out of your pre-tax dollars. (Though it might have a small adverse affect on the tax position of the child for income earned by themselves).

Mary, Dale's "Tax Battles" manual goes a lot into all the advantages and disadvantages of trusts. It's the reason I have purchased my last property through a trust. It's well worth looking at- and it has a whole lot of other stuff about tax matters, particularly in relation to properties. At $99 (still) I'd recommend it.

http://www.gatherumgoss.com/shopping.htm
 

Sim

Administrator
Originally posted by geoffw
Dale has pointed out in his manual about the ability to be able to distribute a small amount of money ($640K max pa) to your children.


Oooh... so I can distribute $640,000 ($640K) to my children ? Woohoo !

I think that was supposed to be $640 was it ?

:D
 
Originally posted by geoffw
Dale has pointed out in his manual about the ability to be able to distribute a small amount of money ($640K max pa) to your children.

I have children 9 & 13 (aarrrgggh... a teenage daughter!). I had not thought about the longer term though until the excellent articles in the Financial Review. They point out that when (if) your child goes to university and reaches the age of 18, the trust can be paying the child an income which reffectively comes out of your pre-tax dollars. (Though it might have a small adverse affect on the tax position of the child for income earned by themselves).

Hi geoff

Thank you for your kind words. In fact, your trust could pay your 13 daughter a wage now for the things that she does on behalf of the trust. This can be more than $643 and she still won't pay tax because she is actually earning the income herself.

This can, if you wish, replace the pocket money that you miht pay her so that the income is again pre tax and not after tax.

It's just a thought.

Have fun

Dale
 
Sorry, I have just jumped in on this discussion, so please excuse me if this has been explained before, but what is a Hybrid Trust?

Wendy
 
Originally posted by bergs
Sorry, I have just jumped in on this discussion, so please excuse me if this has been explained before, but what is a Hybrid Trust?

Wendy
Hi Wendy

A hybrid trust is a cross between a discretionary trust and a unit trust. It allows for the benefits of both types of structures and most of all, the negative gearing advantages in the short term if you have bought in this way.

The issue shas come up before on both forums and it may well be worth doing a search.

Dale
 
Wendy,

Chris Batten has a manual available for $99 which goes into hybrid trusts in some detail- though I must admit, I had trouble following it.
 
Thanks Dale and Geoff,

Do the laws of Trusts differ from State to State? eg. ability to carry forward losses?

Does your manual - "Tax Battles" apply for all States?

And will you be doing more seminars in the future? I am in Sydney.

Mary
 
Originally posted by MSL

Do the laws of Trusts differ from State to State? eg. ability to carry forward losses?

Does your manual - "Tax Battles" apply for all States?

And will you be doing more seminars in the future? I am in Sydney.

Mary
Hi Mary

The laws of trusts are the same throughout Oz. There are some small differences when it come to land taxes in each State, but, essentially, there are no differences when it comes to general law, or tax law.

See above re TB.

I am talking in Syd on 27th of November at abt 7pm. More details to follow.

Have fun

Dale
 
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