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Chan & Naylor's PIT

Discussion in 'Accounting & Tax' started by MadProps, 23rd Feb, 2016.

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  1. MadProps

    MadProps Member

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    Can I please get expert opinons on the PIT and trusts in general. I have been reading up on trusts, they seem a logical long term strategy if setup correctly from the start. The PIT seems to tick all the boxes, though I haven't been able to find any recent discussions on it from here or on SS (please point me to it if there is one).

    If I want a trust that gives me those features, do I have to buy it from C&N? or can any accountant create this for me?

    Anyone bought the PIT? I'd love to hear your thoughts.

    Thanks.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    What boxes does the PIT supposedly tick?
     
  3. RPI

    RPI Property Lawyer, Town Planner Business Member

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    My thoughts are you are better off spending your time with TERRYW on this forum.
     
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  4. MadProps

    MadProps Member

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    My knowledge on Trusts is basically zip as just started looking at them (so please be gentle :p), but the features that the PIT offers include (From their website)...
    * No vesting date
    * Will allow interest to be claimed as a tax deduction
    * provides asset protection
    * provides land tax thresholds (except for nsw)
    * protects the property from the marriage breakdown of your children

    There are more, but these are the features I am most interested in. Are there other types of trusts that offer this?

    Thanks.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    All i can say is all of this is highly doubtful.
     
  6. Jacque

    Jacque Buyers Agent and Bookworm, Sydney Business Member

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    I'm sure any accountant familiar with trust setups can help here. C & N don't, as far as I'm aware, have any "magic" setup that can't be replicated elsewhere. It seems to me to be more about marketing a product to entice and keep clients, but note that's just my personal opinion :)

    Plenty of reading if you type the words chan naylor somersoft
    Threads stretching back years eg: Chan & Naylor and PIT - Somersoft Property Investment Forums
     
  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    My understanding is that the PIT is a variation on a hybrid trust. This structure was once heavily promoted and a lot of investors were using it. I believe C&N created the PIT themselves and promote it exclusively.

    It's difficult to finance. Most lenders are fine with discressionary trusts but very few are willing touch hybrid trusts or any variation. It is possible to get finance, but very restrictive and that's only likely to change for the worse.

    From a financing perspective, these types of trusts can be extremely limiting. They might do all the wonderful things as advertised, but if you can't get finance, there's not much point.
     
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  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    OMG dont tell me someone is still asking this question.

    I'm not allowed to type those three letters cause its a trademark. (I still find that amusing)
    So allow me to refer to a SPIT.

    Once upon a time a clever person wanted to market a property book and be seen as the expert. This firm helped sell property..And did tax work etc. They used a hybrid discretionary trust and claimed it did lots of magical things. It must have cause it cost a lot of money and nobody else had one...(Remember that trademark means nobody else could call their hybrid a SPIT). Other than attract ATO curiosity and a s264 notice.

    And it contains offending clauses so that the ATO wrote a ruling about this type of trust and others too. TD 2009/17 explains the nature of offending clauses and offending behaviours. The issue of "benefits others" comes up a bit. So the ATO ruling describes what feaures should be in a hybrid and what not to do. But with some clever marketing and explanation people had to fix their hybrids that worked so well (Not)...Because the ATO didnt like them. It was costly to amend a deed but can be done.

    I haven't seen the latest versions but I saw a hell of a lot of the older versions and the problems created. I would invest in good legal tax advice before even going near a hybrid.

    And you would have buckleys chance of finding a lender. The law firms told the banks to run away years back.
     
  9. D.T.

    D.T. Adelaide Property Manager Business Member

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    - No vesting date anyway for trusts here in SA
    - deductible Interest, asset protection and land tax (in some states) are features of all trusts.
    - you can't beat the family court. Their power level is over nine thousand.
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Take the no vesting claim for example. This is achieved by setting the trust up in SA which is the only state to have abolishwd the laws against perpetuities. But any trust set up there will achieve the same.

    But what does setting up in SA mean? Is it the place where the trust was settled? The location of the trustee? The place of the central controll and management of the trust? The location of the trust property? Or all of the above.

    These laws are relatively recent so nothing has been tested yet. If it turns out in 80 years that there the trust does vest then what...

    Also any beneficiary or the attorney general can ensure the trust vests too.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Asset protection would be due to having a company as trustee but this would not protect against bankruptcy of the unit holder because the units are property which can be seized by creditors
     
  12. RPI

    RPI Property Lawyer, Town Planner Business Member

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    The no vesting date by domiciling in South Australia (where the rule against perpetuities has been overridden by govt law) has yet to be tested in a Court of law (for assets outside of SA). That makes me nervous.

    You can restrict the capital outflows from the trust to your lineage.
     
  13. wylie

    wylie Moderator Staff Member

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    I know next to nothing about trusts but what I do know is that the trust my parents set up did diddly squat to protect their assets from the "black sheep" brother. But that was due to things other than just the trust itself. That is a story for another time.

    What I do recall is that a family lawyer told us that should either my "good" brother or myself divorce, the spouse would likely not be able to get their hands on the assets of the trust, but that the family court would look at what was held there, look at what is held outside of the trust, and hand a larger share of what is outside to the other party, ie. things would be evened up one way or the other. She also said the family law court had tremendous power in these areas.

    I'm not sure what the lawyers here have to say about this, but it came from a senior and very experienced family court lawyer.
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    See Kennon v Spry high court. DR spry was the trust expert and a leading barrister but his ex wife attacked assets of the family trust. Successfully too
     
  15. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The tax aspects of HDTs are 100% risk. Any perceived benefit is a indication of a concern. A spruikers tool. Witchcraft.
     
  16. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    DCT V Munro ...1960s and the Benefits Others issue mentioned in TR2009/17. Same Munro as the family in the recent SMSF decision in Munro v Munro...Says something about trust specialists.
     
  17. The Falcon

    The Falcon Well-Known Member

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    Google "chan and naylor ato" then decide if you want to employ these clowns to handle your tax affairs....
     
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  18. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    Trusts structures are a compromise of features (e.g. asset protection, various tax and duty outcomes, flexibility, etc). Choosing the appropriate trust structure means choosing the features that are most important to your circumstances. If one particular trust structure sounds like it can offer you every feature under the sun then it is probably too good to be true.
     
  19. MadProps

    MadProps Member

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    Thankyou all for your detailed answers, after raising this yesterday I had a sit down with my accountant who went through all the points raised above and then some!!

    He's had loads of clients that would turn up to him asking for his help to get them out of the pickle the PIT had put them in. Apparantly it will bring alot of attention from the ATO onto yourself and you would be looking at constant audits.

    I will be staying well away from it or should say from pit :p

    My knowledge in this area has improved somewhat, so I am grateful to you all.
     
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  20. hobo

    hobo Well-Known Member

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    Sounds like it's actually a PITA. :p
     
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