Best structure to invest in shares?

[BlingBling]

Re: Best structure to invest in share

Probably family trust.

My advice is to buy the book Trust Magic (available at www.trustmagic.com.au) by Dale GG and take things from there. It explains trusts very well, very easy to read.

Trust Magic is an awesome book. Written so well and easy to understand.. Well worth the investment.

 

[nizar]

Re: Best structure to invest in share

I'm not an accountant (and make no claim of knowing the laws involved here) but I've been around accountants all my life so I would be asking ... is it possible to sell the shares that you bought (as an individual) to your company at the price that you originally bought them, thereby making no profit on the sale. The company would then make all the profit.

If David Tweed (is that his name?) can buy shares cheaply legally then surely you could sell shares you own to your own company cheaply.

cheers
Mouse

A good question.
id like to hear other peoples thoughts about this, seems like a good idea.

 

[clowboy]

This will sound like a really silly question, but can only faimily members be a part of a family trust? To what level does it allow? Just spouse/siblings or does it allow for parents /aunts etc?

The book quoted in this thread sounds like it is a go, but the problem most smucks like myself always find ourselves in is, at what point is it economical?

How much money do you need to have tied up in a trust to make it worthwhile? Or more to the point how much profit do you need to be making to make it worthwhile?

I mean excluding capital (it irrelavant really) if you where making 10k a year in profits would this warrant setting up a trust (tax bracket at 30 or 42%)?

Or do you really need to be talking about 100k a year profits?

What about buying an investment property? Would there be any benifiet of buying that in a trust?


Thanx

 

[GreatPig]

Re: Best structure to invest in share

I'm not an accountant

Neither am I, but...

is it possible to sell the shares that you bought (as an individual) to your company at the price that you originally bought them, thereby making no profit on the sale. The company would then make all the profit.

IMO, no. This would be considered a non-arm's-length transaction, and the ATO would deem them to have been sold at current market value (if they audited you of course).

If David Tweed (is that his name?) can buy shares cheaply legally then surely you could sell shares you own to your own company cheaply.

I think that's different purely because that is an arm's-length transaction, provided you're not related to David Tweed.

And, again IMHO, a fool and his money deserve everything they get...

Cheers,
GP

 

[Mofra]

This will sound like a really silly question, but can only faimily members be a part of a family trust? To what level does it allow? Just spouse/siblings or does it allow for parents /aunts etc?

I'm not an accoutnant, but do read quite alot of financials for a living (including some very interesting arrangments)

A discretionary trust (including family trusts I believe) can make distributions to any beneficiary - including holding companies. As alluded to in an earlier post, once you are at the 30% threashold it may be more advantageous for you (tax wise) to make any spare distributions to a holding company.

My gap in structered tax vehicle knowledge start about where the tax implications of a holding company retaining profits kicks in, as it is extremely easy to buy enough deductable debt in this country to avoid most tax problems anyway (dependant on your own investment aims of course).

 

[GreatPig]

can only faimily members be a part of a family trust?

Again I'm not an accountant, but I believe non-related people can use a trust together (eg. for a joint-venture or business) but it would not be a family trust.

The ATO have guidelines somewhere about who is considered family in relation to a family trust. What I'm not quite sure about though is when these apply. There are certain things a trust has problems with (relating to the trust loss provisions) where making a family trust election gets around the issues. Once an election is made, then there are strict rules about who is considered family for the purpose of distributions, but I'm not sure if it matters so much before that.

You'd need to ask an accountant, or research family trusts and family trust elections on the ATO website.

Cheers,
GP

 

[nizar]

If i trade under a company name, does the company qualify for the 50% CGT discount if shares are held for 12 months or more?

Or does this discount only apply to individuals?

 

[stevo]

If i trade under a company name, does the company qualify for the 50% CGT discount if shares are held for 12 months or more?

Or does this discount only apply to individuals?

No!

I use a company for trading that is partly owned by my Family Trust. The trading company is also one of the beneficiaries of the Trust. Don't ask me why because I really can't remember why we set it up this way, although I guess it gives me a fair bit of flexibility.

stevo

 

[Pager]

I Operate a trading business through a family trust (futures and Options) so claim back GST on commissions etc, as far as im aware and I could well be wrong but it was my understanding that you cannot claim the 50% reduction for shares/futures/options positions held for more than 12 months.

I also have a share portfolio though but only have 8 or 9 transactions a year; this is held in my name through the trust.
So I can claim the 50% reduction for GCT.

Don’t ask me how it works , im not an Accountant , cost me about $2K to set up.

Cheers

Pager

 

[kitehigh]

I'm agree with Wayne and Co that the best structure is offshore.

There are a number of countries that have no income tax and allow you to trade without worrying about captial gains tax. You can set up a share trading and bank account and trade international markets.

You have access to your funds anywhere in the world with a credit card that is linked to your bank account.
And if you had a large amount of money that you eventually wanted to bring back into Australia I guess the best bet would be to go non-resident for a year and than wire the money back into Oz whilst you are a non-resident. As this money is not earnt in Australia the tax office have no entitlement to take any tax from it.

The Australian tax system is not the same at the American system. American citizens have to file a tax return regardless of where abouts in the world they live. As an Australian citizens if you are a non-resident for tax purposes and don't earn any income in Australia you don't have to file a tax return.

 

[johnw7000]

I spoke to Jamie Gatherum-Goss a few weeks back and he said that you can set up a Company as Trustee to a trust plus stamp duty etc for approx $2500.
Jamie is the son of the guy that wrote the book 'Trust Magic'.
He's a really cool guy and very easy to talk to and will gladly answer any of your questions.
He told me that I could distribute up to $1600 per year to each child as beneficiaries within the trust tax free.
The book 'Trust Magic' is available on loan from most libraries or costs just under $100 to buy.
Here's a link to the Gatherum-Goss website with all the contacts etc needed.

http://www.gatherumgoss.com/

One important thing to keep in mind is to not have anything or very little in your own name yet control it 100% through being an Appointee and beneficiary etc.

Great thread!
Cheers,
John

 

[nizar]

Kite and John, you have made some great points.
THanks for dropping by.