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  1. #61
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    Quote Originally Posted by buxlo12 View Post
    Yes you can still deduct expenses however I don't want to be accruing losses in my trust with no income to offset.
    I also do not want a tax bill where I would I would have to either sell shares or contribute funds.
    Just because you dont want to accumulate losses is no reason to turn exempt income into taxable income. The losses wont be forfeited so have value even if used in later periods.
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  2. #62
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    Yes you can still deduct expenses however I don't want to be accruing losses in my trust with no income to offset.
    I also do not want a tax bill where I would I would have to either sell shares or contribute funds.
    Quote Originally Posted by CJ View Post
    Just because you dont want to accumulate losses is no reason to turn exempt income into taxable income. The losses wont be forfeited so have value even if used in later periods.
    Yes I could carry forward losses in later years. However at the moment I do not have plans for the trust to be generating income that is not exempt income from a PIE or dividends with imputation credits attached. It could be a long time before those tax losses are used up. Also I don't want to be forced into a less than ideal investment or investment structure to use up the losses in my trust.

    I was not wanting turn all exempt income into taxable income. I was wanting to have one PIE investment with a PIR of 0% that would derive taxable income. The distributions would be higher as the PIR is at the lowest rate. This taxable income would offset interest and accounting costs giving a net taxable profit of approximately zero.
    The other PIE investments that the trust has I would elect a 30% PIR. This would be excluded income that the trust would not have to pay tax on.

    Does anyone know if a trust can elect different PIR for different PIE investments? i.e 0% and 30%?

  3. #63
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    "Does anyone know if a trust can elect different PIR for different PIE investments? i.e 0% and 30%? "

    I would think only if the investemnt is with two differewnt instituions - as far as the major banks are concerned, well thats how it works for the bank I am with.
    One entity = 1 PIE tax rate. I think you can elect a different RWT rates on "unique" account numberss if you really want to

  4. #64
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    Quote Originally Posted by buxlo12 View Post
    Yes I could carry forward losses in later years. However at the moment I do not have plans for the trust to be generating income that is not exempt income from a PIE or dividends with imputation credits attached. It could be a long time before those tax losses are used up. Also I don't want to be forced into a less than ideal investment or investment structure to use up the losses in my trust.

    I was not wanting turn all exempt income into taxable income. I was wanting to have one PIE investment with a PIR of 0% that would derive taxable income. The distributions would be higher as the PIR is at the lowest rate. This taxable income would offset interest and accounting costs giving a net taxable profit of approximately zero.
    The other PIE investments that the trust has I would elect a 30% PIR. This would be excluded income that the trust would not have to pay tax on.
    Your plan - taxable income offsets expenses so no tax to pay.
    My solution - no taxable income. Can still deduct expenses but they get carried forward as a loss.

    If you never use the losses, you are in exactly the same position as your plan. If you do use the losses, you have saved money. Having PIE income taxed as a final tax does not effect your ability to claim expenses.

    But to answer your question, I believe you can elect different PIE rates but they would have to be on different investments.

    The only reason to not elect the 30% PIR (ie a final tax) is where you will be distributing to beneficiaries that could have used a lower PIR.
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  5. #65
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    Thanks CJ,

    I was just looking at a PIE distribution statement from a listed entity. If the PIR was 0% the dividend would be imputed so their would be no tax to pay anyway. The expenses in the trust would create a loss to carry forward, putting me back a square one.

    However if it was a fixed interest PIE that has a PIR of 0% the trust would be getting a higher interest payment that would be fully taxable. Then the expenses in the trust would have taxable income to offset. Unfortunately I am looking at listed PIE equities that will be paying dividends and not fixed interest.

    I think I am going to set up an LAQC, I will lend money from the trust to the LAQC that am the sole shareholder of. The LAQC will purchase the shares and incur the interest and accounting costs. It will collect fully imputed dividends from the stocks that it owns. The excess imputation credits will be converted to a loss and allocated against my personal income.

    The other issue I have is I do not want to taint my trust from a relationship property stand point. The LAQC will be considered relationship property and I want to charge interest on the loan from the trust to the LAQC. What would be a good benchmark (that would be considered as fair) to charge interest on?
    Last edited by buxlo12; 23-04-2010 at 09:51 PM.

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