Posted by admin on Oct 26, 2008 in
Financial This is a copy of a post from invested.com.au which really helps me understand the relationship between a trust and company trustee. This is not legal or financial advice just an easy way to understand it.
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You need to understand that a trust isn’t a separate entity … it is what’s called a “legal fiction” (it only exists in the minds of lawyers ).
A trust requires a trustee to operate things on its behalf. This is usually either a company or an individual - in your case, you are looking at using a company for the trustee.
The trustee company is effectively just a shell company which does nothing more than act as a trustee. It holds no assets, it does not trade, and most importantly, it does not put itself at risk (if it did, the assets it looks after may also be at risk). As such, because the trustee company does nothing, it doesn’t need its own bank account (beyond that which it operates in its capacity as trustee).
The trust doesn’t have a bank account - the trust doesn’t exist. The trustee has a bank account which it operates “in trust” for the beneficiaries.
It takes a bit to get your head around … but remember, the trustee does all the work but doesn’t own anything itself - the trust does. The trust doesn’t exist, so it can’t do anything without the trustee - hence, the trust doesn’t actually do anything.
Come tax time you will get a tax return for the trust (!!!), and a set of financial reports for the trustee company (which don’t say anything, since it didn’t actually do anything).
It might help to think about it this way: trusts are only about ownership … a trust is used to designate who the beneficiaries of an asset is. The trustee company holds the assets in trust for those beneficiaries. In most situations you only deal with the trustee company - except when buying assets, at which time you designate that the asset is held in trust by the trustee company.
Of course, there is nothing stopping you from having the trustee company do it’s own thing like a normal company would … including running a business or owning assets, but it’s strongly not recommended … the trustee company should do nothing more than run the trust.
(PS. none of this is advice - I am not a solicitor or accountant, this is just my understanding based on what I’ve learned from my own accountants).
Posted by admin on Oct 23, 2008 in
People I met this guy whilst in Thailand. He was at the first meditation retreat I did, and we clicked right away. He is currently travelling through Africa the hard way, covering some of the poorest areas on earth. Check it out…
Here is a small excerpt:
After 15 hours of monotonous driving (broken by few well needed stops) we left the last city of any major size and continued for our goal Arlit, the epicentre of the Sahara.
Two hours passed and the sun slowly sank towards the horizon. In the faraway distance a storm danced over the flat landscape.
Suddenly, with great rapidity it started to move towards us. The driver drove faster and faster while the whole bus sat petrified, watching the approaching storm.
First a wave of silently whispering sand blew along the ground, not higher than a foot or two. Then, as all the windows were being hastily shut, the storm struck us.
Everything outside turned ochre, the driver slowed down and the wind started to shake the bus more and more aggressively.
The visibility sank quickly;
50 metres.
30 metres, the driver hit the brake.
10 metres.
5 metres, the bus stopped.
Then, total annihilation of sight.
The bus stood rocking like a cradle, as the wind was tearing in the windows. Every now and the then the driver would start the engine and drive a metre or two forward, not to let sand build up around the tyres. This procedure continued for an hour or more as the day turned to dusk and the tawny, ochre scenery outside, turned to darkness.
Inside the bus it was quiet. People seemed both astonished and anxious. As an extra bonus to the raging storm, a strong smell of wet goat filled the bus. The half-eaten plastic sachets of yoghurt - handed out some 13 hours ago for breakfast - made their presence clear.
Slowly the storm decreased in strength - and slowly we continued to drive.
Exhausted we finally arrived in Arlit and hurried into the closest guesthouse.
Read more here…
http://www.travelblog.org/Africa/Niger/Zinder/blog-84066.html
Posted by admin on Oct 23, 2008 in
Food I was eating a peach today and got to the seed to find an almond in there!
What! I felt parallax error coming on and started to wonder if maybe i had eaten almonds earlier on in the day (which I had) and got one stuck between my teeth (which is impossible) and it fell out right into the middle of the peach while I wasn’t watching (which I was, as it was delicious and i was savouring its look and taste).
So I looked it up and here you go…
“The almond is a dry-fleshed, close relative of the peach, the fleshy edible peach pulp being replaced in the almond by a thin leathery hull.”
And you can eat them… so I did!
” The important feature distinguishing the peach pip from the almond is taste. The cultivated edible almond is sweet, not bitter, as are most peach seeds. Since plants seem to delight in not fitting into categories, there is, naturally, a bitter almond used widely to produce almond essence and , yes, peach pips that are sweet and edible.”
Posted by admin on Oct 23, 2008 in
Financial Own units in a unit trust that owns a property?
One thing I couldn’t get my head around was depreciation allowances and they effect cash flow. I found this which should help:
People who hold investments in property, either directly or indirectly through listed property trusts or managed funds are able to benefit from depreciation allowances. These are of two types, being depreciation on buildings and depreciation on plant and equipment in buildings.
Depreciation allowances on buildings results in a part of the rental income being tax free to the investor. Depreciation allowances on plant and equipment results in tax deferred income. Tax deferred income is tax free at the time it is received, however when the property (or property trust or fund) is sold, the profit made on the sale is increased by the amount of tax deferred income that was previously received, resulting in a higher capital gains tax liability.
The reason the CGT is higher when you sell is because your cost base slides down towards zero as your tax-deferred income flows through to you over time, but the value of the property will (hopefully) increase which means the gap between them is BIGGER. You will therefore pay more CGT when you sell.
Posted by admin on Oct 23, 2008 in
Financial Tell me a bit about yourself and how you became a broker.
How long have you been in business? Do you take a long term view with the business?
Are you independent or do you prefer to deal with only certain lenders? Why is that so?
Do you disclose all your commissions?
Are you a lender yourself?
How many investors do you deal with?
Are you an investor yourself?
Do you deal with both residential and business loans?
Do you have any experiences buying through a trust/company trustee structure?
Are you a member of any professional mortgage associsations? (MFAA?)
Do you have professional indemnity insurance?
Do you have any references I could call?