Cost Base of property & Frjnge benefits tax

Question

Hi Sir/Madam,

I have a property in a trust (not trading trust, just a discretionary family trust) which is really my home residence. The residence was put in a trust for asset protection as my job can get sued personally.

Question 1:
As there was no rental income generated in the trust as I have been living in it myself. Can the yearly interest on loan, rates, land taxes, repairs form part of the cost base for capital gains purpose?

Question 2:
Also there was no rental income generated at all for the rental property as I am living in it, will it trigger fringe benefits tax? Technically, the trust is providing a benefit to me for nothing. Normally from what I know, fringe benefits tax only kicks in when there is an employer/employee relationship (I don’t get any wages from the trust) so I am unsure whether ATO will say that is a fringe benefit and penalised me later down the track.

Please advise.

Answer

You know you will never be entitled to the main residence exemption on that property so make sure you keep records of everything you spend on the place, even cleaning materials. You are right you can increase the cost base by those things, anything associated with holding the property section 110-25(4)
I am assuming there is nothing more than the house in the trust. If so this means that you are having to lend the trust money to run the house. Make sure you gift it. If it was a loan anyone who sued you could ask the trust to pay back the loan. You are right you are not an employee of the trust and as long as the trust is not an associate of your employer then no FBT.

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