Are you a Developer who has created this issue ?

Discussion in 'Accounting & Tax' started by Mike A, 24th Dec, 2019.

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  1. Mike A

    Mike A Well-Known Member

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    Are you a Developer ? Is this something that you have done ? If so did you know that you may have exposed yourself to a big tax issue ? Worth doing a tax check on these to ensure the issue doesn't affect your business.
     

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    Mike A, 24th Dec, 2019
    #1
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  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I think the majority of people doing similar things have issues, serious issues, which they are unaware of and could be extremely costly when detected.
     
    Terry_w, 24th Dec, 2019
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  3. Mike A

    Mike A Well-Known Member

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    Ill do another diagram where some people have taken funds from their company and used it to invest in their own name and the accountant has argued that since they get a higher rate of return on the investment they dont have an issue

    They have a major issue !!!
     
    Mike A, 24th Dec, 2019
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  4. qak

    qak Well-Known Member

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    qak, 24th Dec, 2019
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  5. Mike A

    Mike A Well-Known Member

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    Mike A, 24th Dec, 2019
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I've seen something slimilar

    Another common two are
    a) broker suggests get a loan in a company name to overcome the NCCP Act restrictions and then the individual uses the money,

    and

    b) trading company guarantees a bank loan for an individual borrower.
     
    Terry_w, 24th Dec, 2019
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    Mike A likes this.
  7. Trainee

    Trainee Well-Known Member

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    Div 7a issue?
     
    Trainee, 24th Dec, 2019
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  8. Mike A

    Mike A Well-Known Member

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    Most certainly is
     
    Mike A, 24th Dec, 2019
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  9. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Phew! I was looking at the diagram and could only see a Div 7a as a possible issue but was wondering what else it could be.
     
    Westminster, 24th Dec, 2019
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  10. Mike A

    Mike A Well-Known Member

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    Ill be doing another diagram.

    Same structure except the development company is entitled to a share of profits on the sale of the development by the landowner

    Major issue if the development was done in victoria and nothing to do with division 7a
     
    Mike A, 24th Dec, 2019
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  11. Mike A

    Mike A Well-Known Member

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    And while paul is away it gives others a chance to join in the fun.
     
    Mike A, 24th Dec, 2019
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  12. Mike A

    Mike A Well-Known Member

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    A second question and more of a practical one

    How do you deal with this issue when the development takes 3 years from acquisition to final completion ?
     
    Mike A, 24th Dec, 2019
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  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    one major issue will be cashflow as PI repayments on a Div7A loan.The effect could be reduced by borrowing as much as you can from the bank and borrow enough from the company to cover the PI repayments
     
    Terry_w, 24th Dec, 2019
    #13
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