Australian (ASX) Stock Market Forum

Taxpayer Alert 2008/3 Hybrid Trust

Jul 10, 2007
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I have just been reading in the current edition of Australian Property Investor about a taxpayer alert from the ATO with relation to Hybrid Trusts.

The alert focuses on the tax deductibility of interest on borrower finds used to subscribe to income units in a hybrid trust. It seems the ATO is investigating if the ability to redirect the income from the trust to a low income earner while the interest is still being claimed as a tax deduction by another beneficiary.

Does anyone here use a Hybrid Trust, either for shares or property? and do you believe this will affect you?

Curious as I have thought or creating a trust when I but an investment property and could potentially use the same trust for share purchases in the future.

Oct 12, 2007
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Hi Brettc4,

You really need to have a long chat to a Trust savvy accountant before embarking on any investment vehicle to see which structure suits your circumstances best both now and in the foreseeable future.

The vehicle needs to be flexible enough to accommodate for such events as changing financial circumstances (eg. loss of job or big pay rise) as well as family changes (eg. children or divorce). Properly set up, it is said to be an effective layer of asset protection (Family Courts excepting).

Lots of pitfalls for the unwary such as potential trapping of capital losses or deductions within the structure but used well, they are an effective and legal vehicle for tax effective wealth creation. Note also the lack of Land tax threshold within a trust structure in certain states and in some areas, a different land tax rate.

Try this site for more reading material. They are good and honest.