Example HDT Deed

Discussion in 'Accounting & Tax' started by salocker, 28th Jun, 2006.

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  1. DaveA__

    DaveA__ Well-Known Member

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    well i actually am and no its not... in uni they dont show us how to do any returns or anything to do with trusts.... bit of a waste of time i reckon

    doesnt the loan get caught under the distribution to related parties and its treated as a dividend, or does this only apply to companies?

    the paper work ur talking about though does that basically a line describing the transaction on the trust side and is just kept with its records??
     
  2. iiinvestor

    iiinvestor Well-Known Member

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    DaveA:

    I wouldn't have a clue on both accounts. :D When I get home, I can check the MYOB file and see exactly what the loan is doing. I should know this stuff, but ignorance is bliss, especially for me and accounting.

    I think (<-- emphasis) that other than the special income units and a few rules regarding distributing all trust cash, they're basically the same as a personal return. I say this because I do the books and the accountant just sends a list of changes. From memory, the changes were minor other than moving all distributions to the loan account.
     
  3. TryHard

    TryHard Well-Known Member

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    Hi DaveA

    If I can add my know-just-enough-to-be-dangerous comments about our HDT, it may or may not help.

    In our case we borrow money (from the bank) to purchase units in the HDT. At tax time we receive the proportionate distribution of income from the HDT, and in our personal deductions we claim the interest relating to the (bank) loan specifically for those units we bought.

    If I understand correctly the distributions and deductions * might * not always be proportionate with the exact unitholdings but that depends on the wording of the trust deed.

    The books by Dale Gatherum-Goss explain HDT's and trusts in general quite well I thought, but I have found NickM to be the font of knowledge when it comes to the tricky questions. :)

    One thing I found was there is so much variance depending on the wording of the Trust Deed that there is no such thing as a clear answer without getting pretty specific.

    Cheers
    Carl
     
  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    Hehe ... this is why I like ordinary discretionary trusts ... simple :D

    (or at least simpler !)
     
  5. TryHard

    TryHard Well-Known Member

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    I long to be positively geared so a HDT is unnecessary :D . Might be a while yet though :(

    - having said that I doubt I would find a 'normal' trust any more or less effort than a HDT - either one would just be another phone call to NickM :)
     
  6. DaveA__

    DaveA__ Well-Known Member

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    im going to sit down and read dales book next week but Nick deffently seems the "go to man" when it comes to trusts... i can see he will be doing my deeds when i set the trust up, i guess im just trying to get a bit more of a real person running a trust opinion rather than reading about it, i feel ill learn more by doing both...

    thinking about the loan, i think it only relates to companies, a trust can loan money which isnt part of its original capital as all income needs to be distributed, so in essance if you recieved a loan from a HDT then its either your initial capital back, or someone elses capital that was put in there... (could this become messy in the atos eyes, someone claiming a deduction for interest outside the trust while the trust lends it to someone interest free?) im guessing an interest rate would be fix this but then what is the point of the loan....

    but anyway cheers guys
     
  7. Simon Hampel

    Simon Hampel Founder Staff Member

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    You need to be careful about lending money FROM the trust ... speak to Nick about that.
     
  8. Simon

    Simon Well-Known Member

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    What if there are little Salsa's that come to light later in life? Will the generic wording leave you vulnerable to any claims? Or is it all at your discretion???
     
  9. NickM

    NickM Well-Known Member

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    Hi Simon
    the little "salsas" as i think Nigel called them, will be automatically included after they have been born.
    The deed will say something like"the beneficiaries of the trust will be the Principals, their spouse, their children ....etc"

    As far as record keeping goes for a trust, you either do it all or do none and leave it to your accountant. We deal with a lot of trusts and we find that those clients that just give us a bank acct summary + details of any other expenses that they may have paid on behalf of the trust, along with the rental statements are generally the most straightforward jobs to do.

    Clients that try to enter it into MYOB or equivalent generally make a mess of it and we tend to spend more time trying to decipher what they have done. I would much prefer to have my clients spend time on educating themselves rather than paying big bucks for tax returns. That education could be attending seminars or possibly consulting with me.

    I do have some clients that do get it right. they are generally the ones with multiple properties so they have had no choice but to be on top of it.
    We have streamlined our systems so producing minutes, unit certificates etc get done by us. If the client attempts it they may make a mistake and in a tax audit i would much prefer to be defending my paperwork.

    Excuse the blunt comments but thats how i see it
    Cheers
    Nick
     
  10. Simon Hampel

    Simon Hampel Founder Staff Member

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    eek - I hope I'm not one of them :eek: ... although I'm sure you'd let me know if you thought I was making your life too difficult ! Wouldn't you ?!!

    I'm always looking for ways to streamline my bookkeeping - given I have no formal training, and am learning as I go about how to keep accurate records ... mostly for my own sake so I know exactly what my financial situation is at any point in time ... really important when planning and exectuting my strategy I find !
     
  11. NickM

    NickM Well-Known Member

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    Sim, i have a policy of telling the client if they are in this boat. They have the best intentions, spend hours upon hours trying to do it, then we have to re-check or reconstruct anyway.

    I like to train my clients wherever possible to get it right if possible.

    Nickm
     
  12. DaveA__

    DaveA__ Well-Known Member

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    would there rfeally be much difference in running the cals through excel in a correctly set up worksheet rather than through MYOB, apart from the end financial statements what other benefits would running the expenses through myob??

    cheers nick
     
  13. NickM

    NickM Well-Known Member

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    Prefer Excel. we have some templates that are very straight forward that we give to our clients for free.
    I think they can be improved and our goal is to set up new templates by 1 July 07.

    Cheers
    Nick
     
  14. iiinvestor

    iiinvestor Well-Known Member

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    That's me! The first time was a laugh (until I got the bill). I like to think I run a tight MYOB file these days, but I'm sure the accountant disagrees. :D

    Appreciate the bluntness. I've been short on tact lately, so I can hardly complain. :)