Trading Loss in Unit Trust and GST on Existing house

Hi accountants,

1. Can the loss in Unit trust be distributed to unit holders?
JV partner and I set up a unit trust (one unit each) and we are making $200k loss from project.
Is $200k loss be shared by both of us, $100k each?


2. Does GST apply to existing house when it is trading under unit trust?
To my knowledge, there is no GST on existing house.
Then JV partner's accountant said there is GST applicable when we buy and sell as a trading under unit trust. I don't understand. If so, can we claim GST that we paid on purchase (margine scheme)?

 

Nope

 

Not enough info here, did you build the house, has it been rented before, did you claim GST when you acquired it etc

 

1. No losses cannot be distributed.
But that doesn't necessarily mean the unit hold will not make a loss.

How was the trust funded?

2. entity has no real bearing on GST.
If a taxpayer is buying and selling land then GST can apply to the sale.

 

If loss is not distributed, does it stay with unit trust? what if unit trust is winding up after proceeds?

We have 3 different loans - Bank and two private loan including mine. My loan is third in line.

 

Okay. Unit trust bought a house from private treaty, so we didn't pay any GST.
However when we sell it, are we liable for GST because unit trust is set up for development trading and registered for GST?
so basically, we don't have GST paid to claim, but payable on sale?

 

No we didn't build the house. We got plan and permit for 3 townhouses but didn't go ahead with construction because it's not feasible any longer (higher building cost, lower end sales than intial feasibility) and we can't fund ongoing expenses - interest etc

House sitting vacant for 11 months now. We couldnt rent it out as preivous owner left it unlivable.

No we didn't claim GST on purchase. Project account said we are liable for GST on sale because this is trading (this trust is set up for trading)

 

Yes
Loss will be lost

Why are there loans in your name? How do these relate to the trust?

I have no idea. This is something the trustee should seek tax advice on. It is likely that the margin scheme could be used thereby reducing any GST

 

I lent money to the project unsecured. Big mistake.

Truss loss will be lost. I will be ended up bearing whatever cash loses, because Cash from proceeds wouldn't be enough to cover all current debts. Bank and other private loan will be paid off first. Mine is paid off only partially.
There is no other asset within unit trust..

 

Do you have a written contract with the trustee for the loan?

You might be able to claim a capital loss if you cannot recover the money.

best to seek legal advice on this and other issues

 

Yes I have written loan agreement with trustee.

Unit trust will be close after sale unfortunately

Thanks for reply on my query. It's helpful. Much appreciated

 

You might want to take advice on keeping the unit trust open…

 

Okay thats an idea. It's would be beneficial to keep capital loss for future.
There is two unit holders, me and JV partner. If JV partner want to wind it up and doesn't want to be involved in unit trust any longer, is there any way to keep the trust open?

 

Yes

 

By buying the other holder's unit, i.e. cash contribution he put into deal as equity?

 

if the other unit holder was willing to wind up the trust with nothing they may be willing to sell their units for a very low price.

but there are various complex rules around carrying forward losses that need to be considered first