Critical info regarding trading trusts

[Dean@Massiveaction]

Talking to Matthew Gilligan today in CHC and disovered soemthing critical he only discovered this year.
If you enter into a S&P agreement on a trade type property or a build and sell, you must already have your trading trust set up. IF you buy a property and set up your trading trust after the S&P date IRD deem this a transfer and you cannot claim any of the GST.
As many of us have beena dvised to not set up a TT until you needed it this is a huge problem. You could get stuck with GST payable on sale and no refunds available on purchase!!

[Cliffy]

Is it still OK to use "and/or nominee" on S & P or should that be the name of Trading Trust?

ie is it a transfer if using "and/or nominee"?

[Dean@Massiveaction]

G'day, makes no difference, it's the dates that are critical.

[Peter1979]

What about with Builders Terms??

Hi Poomba,

Just reading your interesting point on the timing of setting up a trading Trust. Do you know how it works with Builders Terms? The situation I am in is that I have put a 10% deposit down for a section which I have 12 months builders terms on. This means the title still remains in the developers name which gives me time to build and hopefully sell within this time period, before I have to pay the remaining 90%. At the moment I have got "or nominee" in the S & P agreement for the section; haven't yet confirmed a builder, and am still in the process of forming a trading trust. Does this put me in the undesired IRD position? I'm hoping not, due to the fact I have no title in any name and have not outlayed any capital except the 10% deposit on the section which grants me builders terms.

You help on this would be greatly valued.

Cheers

[krispedersen]

I'm in a position where I have a trading trust set up but it's not registered for gst yet. I have a property which is settling in 2 weeks and should have the gst sorted out by then. However as it will be registered after the unconditional date am I likely to have any issues claiming the gst?

Cheers

[fpl]

Nominee

G'day, makes no difference, it's the dates that are critical.

Not totaly correct. You can use and / or nominee if the nominator is different to the new trading trust. EG ABC Ltd and or nominee nomitated the agreement to the XYC Trading trust. (NSA Ltd advice)

I no longer use trading trusts but trade with a limited company and have the shares owned by a trust. Far simpler to operate and easier to change as needed.

If you use a trading trust make sure you know how to administrate it. There are lots of traps like the one mentioned here.

[fpl]

I'm in a position where I have a trading trust set up but it's not registered for gst yet. I have a property which is settling in 2 weeks and should have the gst sorted out by then. However as it will be registered after the unconditional date am I likely to have any issues claiming the gst?

Cheers

Hi Kris,

Talk to your tax adviser if you want advise. You wouldn't take advise from a taxi driver would you?

[Dean@Massiveaction]

Sory not to have replied earlier guys but for some reason PT didn't tell me there were more posts. Since my original post I have fielded several calls and put some people onto my solicitor. Short answer is you are screwed if you have set up your trust after unconditional date. You might get away with it but an audit will stuff up your life. Strongly urge you both to talk to tax specialists to see what the solution is.

[krispedersen]

Hi Kris,

Talk to your tax adviser if you want advise. You wouldn't take advise from a taxi driver would you?

Very true Daniel, I've already gone and spoke to one of company solutions accountants and all you do is backdate the gst

[Dean@Massiveaction]

Just remember Mr Pedersen that that is called fraud and if caught can be rewarded with striped pyjamas and urinating in public for a long time. Suggest you find a more honest accountant.
However in your case as the trust was formed, you don't have an issue anyway! The critical thing is whether the entity existed to be able to enter into a S&P. If not then there is deemed to be "transfer", (sale and purchase) into the entity that wasn't formed prior.