Cross border structuring

James asks:
(updated on Monday, May 13th 2019)

I want to build a property portfolio with family and I am wondering what the best structure is to setup for that purpose? There will be four couples going in together, two of whom currently live in Australia. One couple in New Zealand and one couple in Australia have higher incomes (over $140,000), while the other two couples have lower incomes (around $100,000). We each have our own homes which we will release equity from to combine forces. Any guidance is much appreciated

 

 

Our Experts Answer:

Anything involving cross boarder structuring is complicated by the different tax treatments of trusts and companies on each side of the Tasman. For example, Australia and New Zealand don't recognise each other’s imputation and franking credit regimes which makes double taxation of profits on distribution a real challenge.

In all honesty, a simple partnership of owners may be simplest. This allows losses to flow out and be claimed easily and if there are profits, the tax paid in each partners personal hands will be recognised on both sides of the Tasman.

My view is that a keep it simple approach may be best. But you are going to need a pretty robust partnership agreement to navigate all the joint and several liability problems of joint responsibility for the lending.

 

 

 

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