[Question] Tax Planning

[workingsmart]

My wife has a trust and that trust will start a new PTY, it will be an investment business

I (referred to as John) will loan InvestPTY money on which it will pay John interest. InvestPTY will invest the money on trading online (Forex, Indices and Commodities), profits made from the trading will be reinvested into Real Estate owned and rented out by InvestPTY. Any profits made by InvestPTY will be reinvested in Real Estate

1. If all this is possible is my understanding correct that any money received by InvestPTY is consistently reinvested in new real estate and improvements to existing real estate, will any taxes need to be paid like CGT?

2. Should InvestPTY be charging VAT on residential property? (if a private person is the renting tenant)

3. What kind of interest can be paid to John from InvestPTY for the loan? Is that taxable?

4. What will be best for InvestPTY a PTY or Shelve CC?

[CLIVE-TRIANGLE]

1. If all this is possible is my understanding correct that any money received by InvestPTY is consistently reinvested in new real estate and improvements to existing real estate, will any taxes need to be paid like CGT?
The company will be taxed on it's profits, as normal. In the scenario you sketch, CGIT is not a factor.

2. Should InvestPTY be charging VAT on residential property? (if a private person is the renting tenant)

No, residential accommodation is exempt

3. What kind of interest can be paid to John from InvestPTY for the loan? Is that taxable?
In reality, whatever is agreed

4. What will be best for InvestPTY a PTY or Shelve CC?
Shelf cc's are few and far, so you should use a company. In any event, it might be that the trust does not qualify as a member of a cc.

Something also to be aware of; if all of the beneficiaries in the trust are not directors of the company, it is then not owner managed and is required to be audited, most likely at considerable cost. If some of the beneficiaries are minors then this will be an impediment.

[workingsmart]

Thanks for the helpful and fast response.

Some additional questions
The company will be taxed on it's profits, as normal.
Q: If there is no profit as profit is reinvested then no taxes?

In reality, whatever is agreed
Q: So does John pay interest on the money he receives?

[CLIVE-TRIANGLE]

The company will be taxed on it's profits, as normal.
Q: If there is no profit as profit is reinvested then no taxes?

The profits less expenses comprise taxable income. Whether you reinvest or distribute them is irrelevant.

In reality, whatever is agreed
Q: So does John pay interest on the money he receives?

I presume you mean does John pay tax on the money he receives? Repayment of the loan, no. Interest on the loan yes (subject to the annual exclusion) and also on any distribution of profit. Distribution of profit to a trust is a different matter.