Transferring Expensive Items to your trust

[the_captain]

Hi All,

Been a very long time since I have been on, but it is good to be back.

I have a couple of questions as I finish off my trusts income / expenses statement for this financial year.

1. I have purchased expensive camera gear in my name. However I want this transferred to the trust, the reasoning behind this is that if I was ever sued, I could be forced to sell items such as these to raise the necessary funds to pay litigants. Do I reduce my trusts before tax profit by the cost of the camera gear and write a minute, or do I just need to write a minute. The camera is not used for income / investment producing purposes. I suppose the more adventurous of you might say I could use the camera for photographing IP's etc..etc.. but I reckon $2500 of SLR gear is a bit of overkill for such a project

2. I have also read that you can use the purchases of CD's, Wine, Scotch etc..etc... to reduce the before tax profit of the trust. Is anyone out there doing this? If so how do you go about doing it. I have all expenses tracked and receipts, but I feel uncomfortable, as I am not giving the wine away as a gift.............but potentially it could be an investment. Again I have purchased all such items in point 2 in my own name, but wish to get re-imbursed from the trust.

Am I missing something, or do I just need to challenge my own assumptions a bit more.

 

[wbthom]

Hi All,

Been a very long time since I have been on, but it is good to be back.

I have a couple of questions as I finish off my trusts income / expenses statement for this financial year.

1. I have purchased expensive camera gear in my name. However I want this transferred to the trust, the reasoning behind this is that if I was ever sued, I could be forced to sell items such as these to raise the necessary funds to pay litigants. Do I reduce my trusts before tax profit by the cost of the camera gear and write a minute, or do I just need to write a minute. The camera is not used for income / investment producing purposes. I suppose the more adventurous of you might say I could use the camera for photographing IP's etc..etc.. but I reckon $2500 of SLR gear is a bit of overkill for such a project

Hi captain,

If you settle (gift) or sell the camera into a trust that would secure it against litigation risk but the the 6/24 clawback rule mean it's not fully protected for up to 30 months. If it's gifted you cannot get back the personal cost from the trust - if the trust buys it from you, you may need to declare capital gains/losses/income in your tax return. If it's minuted in the trust using a loan account a litigant suing you can potentially access the value from the trust (negating your asset protection strategy). As a non accountant I am not sure but would expect that it would constitute a capital item of trust expenditure. This means that you would have to depreciate it over time which may limit the benefit of this strategy. You need good accounting advice on this matter.

2. I have also read that you can use the purchases of CD's, Wine, Scotch etc..etc... to reduce the before tax profit of the trust. Is anyone out there doing this? If so how do you go about doing it. I have all expenses tracked and receipts, but I feel uncomfortable, as I am not giving the wine away as a gift.............but potentially it could be an investment. Again I have purchased all such items in point 2 in my own name, but wish to get re-imbursed from the trust.

Am I missing something, or do I just need to challenge my own assumptions a bit more.

Using Dale's "Trust Magic" as a guidline you can in some circumstances give deductible gifts to beneficiaries of a trust. But if you give the benefit eg wine etc to yourself, you will probably need to declare the benefit as income in your tax return which negates your strategy. You may also have some fringe benefit tax implications. Might be best if an accountant like Nick commented on this part.

Bill