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Cost of creating and maintaining a Trust

Discussion in 'Accounting & Tax' started by Honeydew, 5th Jul, 2015.

  1. Honeydew

    Honeydew Well-Known Member

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    Hi,

    I would like to create a trust to purchase my next IPs in QLD in order to save on land tax. I plan to buy several IPs so land tax will eventually be quite costly for me. Would anyone familiar with having trusts please give me some ideas on how much it costs to set one up and maintaining it yearly, accounting fees etc ?

    Also would you have any good accountants you would recommend for this as well?

    Many thanks :)
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Last one was about 2500 including corp trustee, all the ATO / state registrations, initial minutes, advice / discussion time, etc

    Ongoing cost is just whatever your accountant charges to do its tax return.
     
  3. Be Developer

    Be Developer Property Developer Business Member

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    It depends on structure ..

    Happy to recommend Darryl at certus legal in Brisbane!
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You could set up a trust for free to about $10,000 or somewhere in between.

    you really need some legal and tax advice to go with it and some tailoring to suit your needs. I charge $1650 including legal advice and GST.
     
  5. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Yes costs vary also ask

    1. Does it include a corporate trustee with a trust ? Or just an individual trustee ?
    2. Applications for tfn for both the corporate trustee and trust.
    3. Applications for abn and gst registrations where necessary.
    4. Stamping of the deed in your particular state.
    5. What is included in the package ? Does it include documents to assist the banks ?
    6. Various questions you will have after you setup the trust e.g are loans in the right name if a unit trust, what documents do i need to give the bank, unit register updates, issue and acceptance of units, certificates, etc

    Costs can vary widely as some companies inlcude those things others dont
     
    Last edited: 5th Jul, 2015
  6. Honeydew

    Honeydew Well-Known Member

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    wow $2.5k .... was it for one trust alone ? a discretionary or unit trust ?

     
  7. Honeydew

    Honeydew Well-Known Member

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    Thanks Be Developer!
     
  8. D.T.

    D.T. Adelaide Property Manager Business Member

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    No it wasn't as per previous message.
     
  9. Honeydew

    Honeydew Well-Known Member

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    Hi Terry,

    Thanks for the quote! :)

    Is this for a single discretionary or unit trust ? Also what are typical ongoing yearly maintenance cost and accounting cost etc ?

    My primary purpose of setting up the trust for the next IP is to save on QLD land tax as I'm nearing the threshold hence trying to work out if the cost of creating and maintaining a trust will exceed the payable land tax if the IP was otherwise purchased in my own name etc.

    Would much appreciate any recommendations you would have on this.

    In a trust if the IP is held for over 12 months before selling, does it get the 50% discount on the capital gain?
    or does the 30% company tax apply on the full capital gain ?

    Also, if say I have one IP from QLD in the trust and another IP from SA in the same trust, will this incur any extra exit taxes/costs in addition to the above 50% CGT discount or 30% company tax ?

    Many thanks :)

     
  10. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Trusts dont pay tax unless no distribution has been made. If its a unit trust then distributions will be based on who holds the units and the rights attached to those units.

    Be careful with unit trusts when you sell as you have the potential for double taxation if things arent handled properly. If done correctly you will be fine but the unit trust is a powerful beast but it can also be a dangerous beast if not handled by a proper caregiver.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Either. no maintenance costs generally. Just a tax return.

    As Mike said trusts don't pay 30% tax. This is the company tax rate. 50% discount will be available if the beneficiary is an individual.
     
  12. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    And the annual ASIC fee is the trustee is a company
     
  13. Honeydew

    Honeydew Well-Known Member

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    I see, does the discretionary trust have the same double taxation issue Mike ?
    And what is the standard cost of maintaining a discretionary cost per year ?
    also if you just have 1 IP per trust how much does it usually cost to do its yearly tax return etc ?

    Thanks:)

     
  14. Honeydew

    Honeydew Well-Known Member

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    Thanks Terry!

     
  15. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Discretionary trusts dont have the potential double taxation issue.

    If corporate trustee for a DT annual asic fee.

    One property in a DT about 660 to 770 including GST is a generally fair fee.
     
  16. Honeydew

    Honeydew Well-Known Member

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    Thanks Mike, is this accounting fee alone? Is there any other associated maintenance fees to keep the trust active etc???

     
  17. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    ASIC Co Fee (annual)
    Bank Fees on bank account
    Tax / Accountant fee (annual)
     
  18. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    There may or may not be additional fees associated with loan applications too. The lenders need to have their lawyers review the deed and make sure the trustee has the power to borrow and to mortgage trust property. Some lenders will want personal guarantors to get legal advice as well.
     
  19. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Ah yes. And some lenders like NAB always seem to want tiny amendments to some deeds to cater for specific lending products. While small and simple these can add to costs.
     
  20. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If the deed needs amending you are looking at larger fees of around $1000 up as a lawyer would need to review the deed, see if it could be amended, see who has the power, find out if that person agrees to the amendment and then draw up the deed of amendment after considered the effects - would it be a resettlement etc.