Is LAQC a good option for us?

Our Experts Answer:

Hi Angel, if you use the trust directly you will protect the asset but lose the opportunity to offset losses against income prior to it becomming taxable in the company. An LAQC owned personally or even a simple personal partnership would both enable losses to be offset against personal incomes but this option provides no asset protection. A third option which perhaps offers asset protection and tax efficiency but is more complex to administer would be to create another non LAQC company owned by the trust. The two companies are then a wholly owned group and profits in one can be offset against losses in the other by subvention payment.

Because the property company is owned by the trust the wealth is protected. One drawback with this arrangement is that if the property company wishes to distribute a capital gain as a dividend this is taxable to the trust unless it is paid out as part of the liquidation of the property company. This can be difficult if the property company ends up with multiple properties.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.