Ann: Ceasing to be a substantial holder, page-20

Thx Yannpiot.
The following is not tax advice but an example of the complexities of tax and structuring..
As a general rule a trust does not pay tax, it distributes the profit to benificiaries and they pay the tax at their marginal tax rate. A trust can actually pay tax on profit but it would be required to do so at the highest marginal tax rate which does not make sense. Benificiaries of trusts can be a Company / another trust or an individual. Superfunds are actually special trusts that unlike discretionary or unit trusts do pay tax, however their marginal rate is capped at 15%, with discounted CGT at 10%, or 0% if in pension phase. IMO for retirees who are self directed and looking to build wealth its pretty difficult to beat a 0% tax rate but the trick is you need to generate the capital gain.

A company on the other hand pays tax usually at 30% (for an investment company) on the profit upfront and then distributes an after tax dividend potentially with a 30% tax credit depending on the amount of tax paid.

So as you can see for a Fund Manager it much easier to run a trust and distribute the profit to unit holders, and let the tax concequences become the unit holders problem. For example if I owned units in a managed fund as a company or a trust which do you think would be better off if I received a distribution with capital gains? The answer is the trust because it is entitled pass on the capital gains tax discount where the company pays 30% on the full gain. AS a general rule a trust is a distribution vehicle where a Company is used to hold profit and distribute after tax dividends with franking credits at appropriate times (google "Bucket companies").

Funds such as Merchant are hightly regulated and looking to do the best by their clients do are rarely the guys doing anything too cute. The HFT's with their computers parked in the ASX front running us all, well thats a different story but the ASX says thats ok and it provides liquidity to the market.

Can you tell Im bored in ISO?

The Pool