Weekly Update & Tax Notes: 27/01
I hope you're well.
Thanks again for your time yesterday. Once you've had the opportunity to read through all the information thoroughly, let's get a time in the diary. We can discuss your feedback and answer any questions.
As discussed yesterday, below are the costs to establish and maintain a family trust.
- Initial trust setup: (AUD)$2,500 + GST
- The ongoing costs of preparing financial statements, submitting tax returns and year-end tax planning starts from (AUD) $3,300 + GST per year, per property
Pricing is provided by CST
- To gain the minimum tax position via a family trust you distribute to an individual who has been a resident of Australia for the entire period of ownership. The tax rate, in this case, would be 24.5%.
- To note there may still be stamp duty and land tax surcharges on the basis that the family trust can distribute to a non-resident of Australia
- Purchasing an investment property in your own name as a non-resident for tax purposes means you will pay 32.5% on any income earnt, this is if the property is positively geared. If the property is negatively geared you will receive a tax credit that can be applied when you start paying tax in Australia
- Purchasing the investment property in your own name doesn't allow you to claim the 50% capital gains tax (CGT) discount when you sell the property. The government tax you on the gain you have made in the property over the period of time you have owned the property. This gain is taxed at your income tax rate in the year the property is sold
- As our strategy is to hold the property, the cost to establish and maintain the trust would most likely negate the tax savings.
The small print! The above advice is of a general nature, please consult a licensed Australian tax account to understand your personal position and what's best for you.
Next time we jump on a call we can discuss the above in more detail and I can also explain any of the terminologies.