Tax implication on Family Trust's business operations

Discussion in 'Accounting & Tax' started by PropertyInsight, 27th Nov, 2018.

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  1. PropertyInsight

    PropertyInsight Well-Known Member

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    Hi

    I have a Family Trust which holds a investment property. The trust generates loss every year due to no negative gearing.

    I am going to work as an interstate contracted IT consultant role. I will flight interstate and back home every weekend.


    If I use the ABC Pty LTd ATF XYZ trust to sign the IT contract with my client, then the ABC Pty LTd ATF XYZ trust hire me as a consultant, can I offset the IT contract income against the rent property loss? also can he ABC Pty LTd ATF XYZ trust claim the following expenses

    1). Air tickets, vehicle petrol, taxi as travel allowances?
    2) Meal and accommodation allowances?
    3) Living away from home allowances (Living-away-from-home declarations )

    Assume that the ABC Pty LTd ATF XYZ trust has ABN and GST registration.
     
  2. Terry_w

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

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    The trust generates a loss because its income is less than its expense, not because of no negative gearing. A trust can negative gear as you are aware from your next comments.

    Have you sought advice on if this is personal services income? If it is you will be taxed on it rather than the trust.
     
    Ross Forrester likes this.
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The PSI issues likely mean that any of the trust income will be treated as excluded from the trust and deemed to be personal income of the individual anyway. In the Trust tax return - Item 30. Does the income of the trust include a individuals personal services income ? = YES ?

    And then there would be Part IVA. ATO would attack under PSI and also Part IVA as a two limb approach.

    Then the flights/travel etc wont be deductible.

    1). Air tickets, vehicle petrol, taxi as travel allowances? No.
    2) Meal and accommodation allowances? No
    3) Living away from home allowances (Living-away-from-home declarations ) No

    Allowance ? So the trust will employ you ? ATO would argue the trust expense payments are private outgoings.