Why should'nt they comment on cookie cut trust deeds that were sold in bulk?
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What a great guy. This solicitor must have very happy clients.I rang the solicitor involved and he agreed that ruling referred to his deed. During the imformative and objective conversation it became apparent to me he was still selling the deed. So I asked are you still putting people into this deed even though you are aware of the PBR? He said oh yes, it is up to the accountant to decide if it will stand for tax purposes.
Hi Ajax, a bit of a late response to your post but hasn't the recent Bamford case settled this point:Ebbie,
I would be concerned about claiming a deduction for interest incurred in the earning of income where that income was actually capital gains re-classified to be income by virtue of the wording of a trust deed. Would want to consider the mechanism by which capital gains are classified as income very carefully.
The various indicia (in tax case law) of what is income and what is a capital gain would probably be applied, and not the wording of a trust deed.
Hi Rob, is this a fact or yet to be tested in the courts?There is no asset protection for unit holders.
The unit holder can't force the trustee to redeem the units so the property is still safely tucked away in the trust. The new owner of the units is entitled to a share of the income attached to those units.
Most HDTs on this forum have units held by ONE person - the high MTR individual who claims interest deductions.
The unit holders en-masse have a right to control the assets under this structure via appointment of the Trustee.
No doubt the trustee could find a way to reduce the net income of the trust?
The Trustee is bound to look after the unit holders' interest as a whole. To deliberately alter strategies to disadvantage a particular holder is an abuse of powers, and there are equitable remedies.
You wouldn't be suggesting that there should be discretionary powers by the Trustee ? What would that do to interest deductibility ?
Also, what about possible value shifting issues ?
Interesting. This is something I'll have to research because I haven't heard of it before. The only thing I've seen is in my trust deed where it says:The unit holders en-masse have a right to control the assets under this structure via appointment of the Trustee.
You wouldn't be suggesting that there should be discretionary powers by the Trustee ? What would that do to interest deductibility ?
I would just like to add something for Accountants here. I have read a few HDT deeds but as I am not a solicitor should not comment on them, I thought. One in particular to me seemed to fall foul of PBR 65710. So I rang the solicitor involved and he agreed that ruling referred to his deed. During the imformative and objective conversation it became apparent to me he was still selling the deed. So I asked are you still putting people into this deed even though you are aware of the PBR? He said oh yes, it is up to the accountant to decide if it will stand for tax purposes.