Unfortunately, if incorrectly used, a
Family Trust can create serious financial repercussions.
The secret is to understand what these
are at the outset to ensure you're not one of the people who makes one of these
common mistakes.
TAXES ON FOREIGN INCOME DISTRIBUTION
Various state governments have
introduced additional real estate stamp duty and land tax applicable to
foreigners.
The thing is the definition of a
foreigner is very broad.
Family trusts allow for a very
flexible distribution of income to a wide variety of people in your family
group.
Plus, this income
distribution can range from nil to all of the trust income in any year.
What this means is that if the
beneficiaries have a relative who is a foreigner, that person would be entitled
to be considered for a distribution.
Under recent legislation, therefore,
the various state governments would see this as falling within the foreigner
category and would apply the higher taxes to the trust.
Note: An actual trust distribution does not need to be made to the foreigner!
The mere fact that it is possible to make such a distribution is enough to be caught
out.
Fortunately, there is a solution that
ensures that your Family Trust is not impacted by the new State foreign
ownership rules - if the right clauses are included.
RealRenta has all the tools that a property manager has but for
less than ¼ the cost of a property manager.
Join now and the cost is less than a cup of coffee a week to manage your
rental property.
RealRenta also has a free vision, so why not check it out.
Jason Gwerder
Thursday, 29 June 2023
