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Recommendations for trust bank account

Discussion in 'Finance & Banking' started by MiddleClassMonkey, 31st Jul, 2007.

  1. MiddleClassMonkey

    MiddleClassMonkey Well-Known Member

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    Hello

    Can anyone recommend a good bank account for a trust? It's for a corporate trustee and will be used solely for the trust's finances

    Your definition of 'good' may vary, which is partly why I've posted this thread. I've been suggested Macquarie CMT, but I've read you need to park $5,000 there as a minimum balance and I'd rather leave $5,000 in my offset account

    Is there some advantage to Macquarie CMT that I'm missing?

    - MiddleClassMonkey
     
  2. Rob G.

    Rob G. Well-Known Member

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    "your" offset account - do you mean "your" money or the money held by you on trust ?

    Rob
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    No real advantage other than it's a good basic high interest paying account - I use the Macquarie CMT for my SMSF ... although I've only had it a few weeks so I can't comment about any problems yet.

    Doesn't really matter what you use. I have a NAB Business Cheque account for my Trust, it's a bit expensive in fees, but it is convenient since I use NAB for my personal and business banking as well - means I only have to log into one internet banking site to look at them all, and fund transfers between the accounts are instantaneous.
     
  4. bundy1964

    bundy1964 Well-Known Member

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    Savings and Loans Credit Union for me, no fees unless I write cheques and conviniant online banking. Only downside is it's a trip to the city if I want to do any over the counter stuff which is rare now.
     
  5. Glebe

    Glebe Well-Known Member

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    I just have a Westpac Classic Plus for my company trustee. Nothin' fancy.
     
  6. MiddleClassMonkey

    MiddleClassMonkey Well-Known Member

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    Thanks for everyone's comments.

    RobG, I meant my personal mortgage offset account. In short, I have a mortgage on my PPOR but would like to invest some capital I have. For debt re-cycling, I plan to place all capital into PPOR's offset then redraw as investment debt.

    I'm now a bit confused, as I was planning to invest through a trust. If I redraw for investment purposes into shares/CFDs/MFs through my trust, how do I move my money from my personal name to trust's name? And who will benefit from tax deductability on the "new loan" - me? or trust? arrrgh!!

    - MiddleClassMonkey
     
  7. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    So you have a loan on your PPOR and you were looking to borrow money (equity) and invest that via a trust ? Is that correct ?

    This is exactly the situation we were in when we first started.

    Unfortunately, if you use a discretionary trust to hold the assets, you don't get to claim the interest expense from any personal borrowings you made. What you would have to do is lend the money to your trust and claim back the interest you pay personally as an expense from your trust - thus the trust effectively pays those costs for you. No negative gearing sorry.

    There may be ways around this using other trust structures (HDT ?), but that's not my area of expertise.
     
  8. Rob G.

    Rob G. Well-Known Member

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    You need to have a split personality with trusts - even when you are a beneficiary (especially if you are not the sole beneficiary).

    As a trustee you are the legal owner but not beneficial owner of the trust property.

    You are not permitted to make a profit from your position of trust. Hence by including trust property (money) in a personal offset account you are personally benefitting from the 'free use' of the trust money - i.e. the interest reductions on your personal loan.

    The ATO is keen on checking the technical details of trusts that may be used as tax planning vehicles.

    Also, if you freely mingle your assets with trust assets then the latter may be deemed within the reach of creditors & litigants !!

    Of course, you need to check this info with your Accountant as your specific situation may be different.

    Cheers,

    Rob
     
  9. MiddleClassMonkey

    MiddleClassMonkey Well-Known Member

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    Thanks for your comments.

    The capital I'm looking to invest is my personal capital, not owned by the trust. My aim is to invest in a mix of growth and income funds. My wife doesn't work and I'm on the top tax rate so to take advantage of our tax position we've got a (hybrid) trust.

    Now I could simply transfer the capital to the trust's name and invest away, but shouldn't I debt recycle?

    If yes, how do I debt recycle into my trust?

    I could place the capital into my offset, then redraw and:

    1) Invest in own name, and the loan would be tax deductible (but gains taxed at top tax rate)

    2) Invest "through" trust and distribute gains to wife to avoid top tax rate. But by doing this I lose tax deductibility on the loan right?

    Is there any way I can have the loan tax deductible AND investments made in trust's name?

    - MiddleClassMonkey
     
  10. Rob G.

    Rob G. Well-Known Member

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    I would not want to give general advice in case it is misconstrued as a recommendation !!!

    Is income splitting the only objective - what about asset protection, estate planning, possibility of running a business through the trust etc ?

    There is an infinite variety of structures, each with advantages & disadvantages for which you REALLY need to get advice.

    As Sim mentioned, borrowing individually to put capital into a discretionary trust is not sufficient to make interest deductible to you. If you made a commercial loan to the trust from which you will derive interest income MAY make interest deductible.

    Also, buying units in a trust MAY make interest deductible if it can be shown to derive your assessable income by the fixed distributions. Note also that this gives a cost base for CGT when the units are redeemed.

    When you get to a HDT then the variations are enormous for borrowings and YOU NEED ADVICE.

    You are the trustee and you are required to be aware of your fiduciary duties etc....

    Sorry, but I don't work in this area ...

    Cheers,

    Rob
     
  11. MiddleClassMonkey

    MiddleClassMonkey Well-Known Member

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    Thanks Rob, I'll go back to accountant. Just thought I'd give it a go here since a few posters promote debt recycling and use of trust structures (but perhaps not together?)
     
  12. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Hi MCM,

    You might be able to use debt recycling and on-lend the 'recycled' debt to your trust? Like Rob said, speak to your accountant, it's very difficult to assess your situation without knowing the details, not that I would be willing to give advice anyway.

    Mark
     
  13. Francena

    Francena New Member

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