Best structure for Share/Property portfolio?

Off market transfers also are a cgt.event.

If you are wanting to debt recycle you would be periodically selling with some growth anyway. I don't think cgt is a big deal as it would be half of once tax at worst case

 

I don't plan on selling the shares Terry.

How would I transfer to different entity without cgt?

Back to original questions, what entity structure do you think would work best for a) shares, B) immediate development properties and c) future development properties? I don't know what states I'll be purchasing in yet so not sure of land tax thresholds etc - this is something I'll have to consider at the time

 

You cant. Transferring from one entity to another is considered a sale and purchase. But seriously, it's 30k of shares, right? Even if it's all profit thats only 30k.

Dont worry about those existing shares. Focus on what entity you use for the shares you will buy going forward.

They'll likely be different types of entities. And some you don't need to set up yet. Doubt you want to move the existing properties given stamp duty and CGT.

 

your accountant will be able to go through your structures and do some tax modelling so they will be best to advice on the structure. without modelling it's like asking whether a peae hotdog business is a good investment.

 

Fair call. I'll probably just keep those shares in the trust and buy new shares in different trust if needed. Was just asking because Terry said Transactions costs were low so you can move between structures.... I thought he was suggesting no cgt somehow.

Question re my existing trust - if I change from individual trustee to corporate trustee, do I pay stamp duty? My qld solicitor suggested I need to apply for cgt exemption.

 

in the sense of no stamp duty and minimal brokerage for shares.

 

Thanks. Makes sense. Individual trustee atf trust will get 50% cgt discount if I keep my current shares for 12 months, right?

 

Hi Mike, what would they have to model?

At the end of the day I'd like the structure which has the best asset protection and flexibility to distribute to beneficiaries, and ideally one where I don't lose ability to utilise franking credits and negative gearing on my properties. (ignore land tax threshold issues for the moment)

I guess if I had the benefits and detriments of each structure I could then figure out what I prefer.

For someone who isn't an expert in tax laws, sometimes the more you read, the more confusing it all gets...

 

Sounds like you didn't take in much written in this thread

 

Duty will depend on the terms of the trust and the location of the land

 

Properties are in qld Terry

 

Change of trustee could potentially trigger duty in Qld.
Not sure why your lawyer concerned about applying for a cgt exemption. See my tip on cgt on changing trustees.

Also trustee being company or individual is irrelevant for the 50% cgt discount

 

Sorry I meant stamp duty exemption not cgt

 

fact is you either put in enough time to learn this, which you wont get from a few posts because you dont have enough basic knowledge or clear enough understanding of tax terms.

or you pay and trust a lawyer to do it after describing what you want and what your future situation might be.

 

Hi all, I've spent some more time re-reading the thread a couple times and also reading some of Terry's tax and structuring tips. Excuse the silly questions, I'm just trying to get my head around it all. Slowly getting there...

While I'm waiting for some advice from my accountant, I'm going to re-cap my thoughts and understanding.

Firstly, re the existing trust (Personal name ATF ABC Trust) which holds 2 IPs + $30k shares, I understand having a corporate trustee would be beneficial if someone from one of these properties sues the trustee. But I guess it's the same level as risk as I run with the 7 IPs I own in my personal name (ie being personally liable). I won't be developing any properties in this trust in the short term so no high risk activities. Owning shares doesn't pose a risk as I understand. Shifting to a corporate trustee might be challenging - I need to consider whether I will pay stamp duty on changing trustee on existing IPs in Trust, and also refinancing fees (a couple of the loans are fixed).

Owning shares in this trust is not ideal as you can't take advantage of franking credits in a trust that doesn't have a positive income. (What happens to these franking credits? Say my shares pay a $1,000 dividend franked @ 25%, does it just reduce my losses in the trust by $1,000?) Also the shares are exposed if the trust is sued (again no high risk activity happening here but still a risk)

With the shares in this trust, I guess I have 2 options:
1) Sell them (ideally after 12 months to take advantage of CGT discount) - profits will be tax-free as there are losses in the trust, and I could distribute all the funds to myself to pay down PPOR debt and debt recycle
2) Keep them long term. Lose franking credits until such time as the Trust is making a profit, and then I can take advantage of the franking credits

Secondly, with share purchases moving forward, it seems this should be in a trust. I'm not sure what the benefits of having a corporate trustee are for me, given the trust will only hold shares so nothing high risk happening here. (What am I missing?)

Re future property purchases, I'll park this to the side for a moment.. Let's see if I'm on the right track with the above 2 first...

 

What if you as the trustee goes bankrupt? Die, go crazy? Want to pass control of the asset to your children?

asset protection and flexibility goes both ways. Look at protecting the shares from everything else too.

 

I think you are thinking about asset protection the wrong way. Who will sue the trustee ? A tenant ? No. They will make a liability claim an insurer will consider. And defend.
Changing trustee from individual to corporation is generally neither dutiable or a resettlement. Seek legal advice anyway or if done badly it could pose a concern.
Refinance would be required. Siounds like poor planning is establishmnet to be honest. I never understand why people chosoe a human trustee for a trust as it can expose a range of issues to legal threat there is not a trust.

Planning non property investmnet income in a trust should occur prior to doing so. For example, if the shares are sold at a profit there may well be a distribution available even if the trust produces losses. A trust can sometimes stream capital gains for example. Maybe to a beneficicary with cap losses.

Is there a family trust electiona and who is the test individual ? That may be a issue for the franking as well. And use of losses etc.

Can Mr Smith as trustee distribute to Mr Smith ? And can the trustee borrow from itself etc.
What happens if Mr Smith is not ordinary resident ?
etc

 

Its reasonable to think the shares trust might have 7 figures in it in the future.

do it properly up front and save yourself headaches.

choose your advisors wisely and trust them.