The Sounds of the Baskerville Podcast Transcripts

Audio file

75. Special Powers.mp3

Transcript

James Flaherty

Welcome back to The sounds of the Baskerville today with the quasi judicial Chris Baskerville. Hi here, Chris.

Chris Baskerville

Good morning, James.

James Flaherty

So listen, this episode is really. About what we call a friend of mines. Who are your friends and who are your foes? As you chased this Ponzi scheme down, maybe before we go, just how can you be quasi? What does that? I’ve been being crazy judicial Christ.

Chris Baskerville

Yeah, well, I don’t have my Oxford legal dictionary with me. James. Thanks for the notice. But quasi, judicial refers to part of the role of the trustees and the Grands app. And I refer to trustee in the insolvency context when it comes to making a decision or an adjudication. The claim and that. Could go as far as also having. To make a. Decision on what is the prospects of success of a counterclaim, and unfortunately we are put in the in the position we. The courts expect us to make a decision, and so we have to use a quasi-judicial mindset or a judicial mindset to adjudicate on the claim that becomes binding. And if the party that is aggrieved by that decision doesn’t like it, well, we’re off the court to argue why we made the decision in the first place.

James Flaherty

And there’s just that kind of weird sort of fusion. And, like, between accountant and lawyer, sort of that you kind of this kind of funny path that people in your profession will. Because you are very specialist in what you do and I’m pleased you do it because it seems very stressful thing to say.

Chris Baskerville

Here, really, when you get into it, you go. Why not choose this path and I’ll still with theseBond University students recently. And I said if I buy time again, knowing that this is the profession that I was gonna land in, I should have done the law and Congress. The joint degree? Yeah. Instead, I just did comments and forgot the law element and then I realised, Oh my God, there is. So much law. To understand in being in insolvency practise.

James Flaherty

But by the same token, if you’re done law degree, then you don’t have all that deck accounting knowledge that you need. To draw upon.

Chris Baskerville

To be able to make so many of the decisions that you make so well, that’s the interesting thing I find about the profession and it’s quite it’s quite neat because in the Australian under the Australian systems, you basically encouraged to become a professional counter and have all of those registrations in place and then law is like this. Side hustle that you gotta get your head around, yeah. Yeah. Yeah. Just basically from learning on. Job. So yeah, for some reason we say we want liquidators to be accountants as opposed. To lawyers and it’s interesting.

James Flaherty

OK. And I’m sure there’s lots of lawyers around the. Place go. I think it’d be. So much better for.

Chris Baskerville

Rural lawyers for you never trust a lawyer with accounting. They never lose their numbers and they should have to. All my learned colleagues. Out there and.

James Flaherty

Let’s talk about learned colleagues, cause I suppose that’s where we should go and nice segue so. Friends and foes.

Chris Baskerville

We’ve talked about the the SEC to their evaluation and let’s start with the the the sort of the Gorilla ASIC, you had your relationship with them unfold over this thing. It was an interesting relationship with ASIC. And I think this whole frenemies or friends and foes reference came about because originally ASIC. D Then this is all. Public record try to have me replaced as Liberator with their preferred liquidator. And they were trying. To do that via court order. So so. What had happened? That is, in the context of things, someone in America had triggered the SEC, which and then launched an SEC investigation. SEC contacts ASIC, ASIC, then with time eventually puts a basically a freeze over all the assets of Gold’s Guy appoints 1/4 pointed receiver. Whose job is to go in and investigate. And provide a report to the court. About. In your short. Limited time quarter receiver. What do you see as? How’s the money being spent? Of course. The receivers poor comes in pretty damning against the scheme. Yes, all this money has gone elsewhere, not to investments. It’s gone elsewhere. So then ASICS ordinary next moves then is having frozen all the assets. Having then appointed the court appointed receiver, got the receivers report. The next movie is we’re gonna now applied that. The court should allow our court upon a receiver to become a court appointed liquidator. And so my appointment voluntarily between those two steps happened. This was a frustrating element for ASIC because they couldn’t follow their system, so no criticism on ASIC. That’s them following their standard procedures. But Ken Grace effectively made me the liquidator of his entities voluntarily by literally or at least his lawyers simply encouraged him. His his lawyers strongly encouraged him because I think they basically said, look, you just got to bring the card. To an end.

James Flaherty

But you can’t rock up to court and say hi. In court, I want this job because it looks like an interesting job. Can you gotta sit there and say? Help me? Yeah. Because he’s gonna judge goes all with these guys look pretty ugly. Why would I do what a regulator wants and put their fellow in white? Or who are you, Mr Basketball? Such that I want.

Chris Baskerville

Yeah, this is the interesting tension point and this is. Probably we’re at the beginning loosely. You could probably say ASIC was effectively against me because they had squarely said we see that being appointed voluntarily and I’m trying to be an open book with ASIC saying, hey, I’ve been appointed voluntary. Please, I’m here to help. Can we meet? Can we catch up? Can we just exchange information to? And of course. I I end up with three days of radio silence. Right. And then the next thing you know, here’s the application to, you know, basically bring you out and we’ll stick out by in. So that ends up resolving in a contest in the courtroom now. I can’t be a greedy liquidator and roll into the courtroom and say, oh, you’re gonna, I I I can see there’s some pots of gold in this job and that’s the reason I want to stay in place. I can’t do that. I mean that that looks so bad. It’s really. What are the creditors want? And it looked like that. No one in that courtroom was acting for the investors that. Lost 20 + 1,000,000 dollars and so my initial job once I became appointed liquor add it was to convene a meeting of the investors. I just couldn’t get that meeting done any earlier than the January following my appointment, just with Christmas and New Year’s and all that and the notice periods required. So if the court granted an adjournment. To this, you know Fisty comfort asset to. Kick me out. It actually served. In my favour, because it gave me. An opportunity to. Actually hear from the aggrieved people. Well, what do you want? You know, ASIC is on the March. They’re in the courtroom already. They’ve got their preferred guy. I’ve been appointed voluntarily. But I’m here for you anyway. Even if they called a point of receiver became caught upon liquidated, they would be. There for you as well. You’re the agreed. You tell us what you.

James Flaherty

Want and I’ve reached out to you guys directly or.

Chris Baskerville

Ready.

James Flaherty

Now. Yeah, that’s right. So I’m here. I’m the one talking. So from an investor’s perspective, you’re all thinking is going on. I’ve reached out to them. So then come the German. When the Germans over you. What? You fly back to court. So. Well, in the meantime, I’ve spoken to all these people. And they’ve all they all seem pretty happy with my pouch.

Chris Baskerville

We had to move very quickly, of course. So. So we didn’t, we didn’t just get a point of liquid. I’d sit on our hands and do nothing because I am the liquidator until. I’m not so as the liquidator, you got duty. So we ran fast to call in the banking records. Start working out. What assets? We could probably just secure. I mean, Assad had done a great job in in at least getting a freezing water there. But could I go one step further caveats. Can I actually physically secure assets like physically go grab them? And and I mean.

Speaker

So.

Chris Baskerville

So we did, we did all that and also our turbocharged some of the investigations ahead of that meeting of the investors. So they could see we’re not mucking around in this very limited window we had. We can now start to see where the guns need to be pointed so that the investors were confident well, this guy’s already ahead of the curve. He’s on the money. I think we have. Confidence. He’s got so they gave.

James Flaherty

He effectively gave them the choice of approach, you know, quite a commercial person, so he just. To tackle the commercial interests of the organisation you lock things down. You move fast. Your process is.

Chris Baskerville

Quick yeah. Ohh should add James. There’s two elements. What ASIC were doing? One is they had their enforcement element which were driving the court order process, the receiver and all that. And but the other side was their investigation. Right. Which are the guys that sit in the back office compiling the evidence and ready for prosecution? I actually invited the lead investigator from ASIC to come and join that investor meeting, so I said to the investors, you can now ask direct questions of the lead investigator and I think that was just a nice sort of food in the CAP and nice stroke.

James Flaherty

Yes. And the court. Took the view that. Yeah, OK. Well, it’s all the investors are and. We’re happy to. Work with you. OK, so just leave things as they are. Yep, we don’t. There’s no benefit to change now. So good. So then what happened? To sounds like to Essex. Great. Credit those who have gone. Gobble, gobble, gobble. But hey by. The way here’s will. Here’s where here.

Chris Baskerville

They were definitely a little bit upset that they weren’t able to follow through with their process and they’ve got a process they they follow it and it is it’s a good process like what they ordinarily do makes sense. To me, freeze everything, put someone In interim, get a report and then move to the liquidation element. But just the voluntary appointment in between those two steps was a bit of a frustrating process, but now that I’m in that the investors have said we’ll keep you in the court. Then we made the decision. You’re now the court appoint. They could add the best girl. So I went well. Thank you. I then started working with their lead investigators and it was a really good marriage of we were trying to exchange information between ourselves that would help their prosecution and then would also help me. Where’s the assets? Where’s the money? Has anything gone overseas? Has anything like they were able to confirm a lot and they said, look, we’ve investigated this, we haven’t actually seen too much money. Leave Australia, so I went well that I’m. Reassured by that and. All these elaborate schemes in the. Cayman Islands and the British Virgin Arts and. America and all you know, all these. Which goes to all those previous episodes. He actually wasn’t that sophisticated because it’s like they didn’t even sort of parcel that way, often dodgy overseas with. Yeah. And, you know, you don’t wanna be encouraging any, any style of fraud, fraud and does everything and and it’s a horrible thing. It is not a victimless crime. People get hurt. Right. But part of me was thinking, you know, the hypothesis that. We go through. Is if this guy is half smart. A lot of this money has exited the Australian shores and if he further smart he is in his attitude, he should have left the country with that money like you.

James Flaherty

I’ve got a jurisdiction.

Chris Baskerville

Non extradition and something is not part of the.

James Flaherty

Even if you had to go into a violin case like so. Yeah. So The upshot of this is that it’s a. Yeah, some great relationships with some people from ASIC who really kind of. Yeah.

Chris Baskerville

Yeah, I believe investigators and us from ASIC and even I’m pretty sure one of the lead investigator. But if my memory serves me correctly, they were saying it is a shame that the investigation. The basic and the liquidators don’t work more hand in hand like in terms of the exchange of information, the exchange of intelligence, so to speak like it, because you know they’ve got wide ranging powers, probably powers that. Are a lot. Greater than any ordinary liquidator, right? I have limitations on where I can go because I’m also constrained by commerciality.

James Flaherty

But.

Chris Baskerville

Say, but I have a duty to investigate and you could marry up with ASICS investigators and you could actually walk hand in glove with some. Of this stuff well. It would speed up the process and be so much more effective, you know.

James Flaherty

OK, there’s something for a white paper. Yeah. So then so then they they sort of became friends, and they’re sort of where the people who caught it. What’s an example of, say, somebody who practically don’t ever give names but is one of the lessons about this that you can’t be the friend? Of people, you got a job. To do, but if someone is like they’ve got a preference, they should be open with, shouldn’t they? They maybe should get legal advice, but how do I? Deal with you. Well, you’ve talked about this to sort of. The black, the white and.

Chris Baskerville

The grey and those lawyers that understand commercial litigation and something very, very well. My gut feel is the advice they give their clients to you is if you tickle all the boxes for these unfair preferences and you tickle all the boxes for an unreasonable direct related transaction, you tick all these boxes. In other words, the liquidator has you guys on toast in terms of all the evidence and what they.

Speaker

Yes.

Chris Baskerville

They then settle quick, settle early. Just get in. We want to hit. Do it, dear. We just want to bring this to an end. Settle, quick, settle early, you know, and just get it out of the way, because that, generally speaking, and look, I can’t speak for every generator that’s out there, but. But generally the attitude is and you bury it in the sand and you’re making it very difficult for us to resolve. Well, we have to resolve like it’s on behalf of the aggrieved creditors. I have to ask you to surrender this money back and we tickle all the boxes of why you should. And if you just make that process more frustrating, then the bill only goes up. The settlement only goes up. The amount you have to pay goes up because the more we have to spend and prosecuting the claim, the less amenable we are.

James Flaherty

To settle. It’s a bit like the Incredible Hulk. Don’t make me angry. You wouldn’t like me when I’m angry. OK, so the cases. Where was there? Quote You talked about enemies since you didn’t really have any enemies.

Chris Baskerville

Ohh, look again. What I’ll say to these bond students the other day is that you do the combative profession like you can’t come in here and thin skin. You gotta be reasonably thick skin because he’s combative. People don’t like surrendering cash.

Speaker

It was like quite.

Chris Baskerville

People don’t like surrendering property, particularly when the person has holding the cash or the property vehemently believes in their mind. This is my profit, right? Exactly. That. You know, when you have to disgorge that, then it makes people unhappy just thinking back to sort of the ASIC being sort of opposed to us. And then now they’re for us or with us is. It just reminded. Me of Abraham Lincoln. That I’m gonna paraphrase here. But he basically. Said if I’ve turned my enemy into a friend, have I not destroyed my enemies? I thought that was my person, but and I’ve always had that in the back of my mind. If I can turn an enemy.

Speaker

So.

Chris Baskerville

Into a friend. Never not destroy my enemies. So you.

James Flaherty

Had sort of. You turn people around. Your head people who understand the not the game, but the process they’ve come to you and said you know and you’ve had to, I imagine price some money out. Of a few people who. Want to have a stout?

Chris Baskerville

And as you say, typically if you do that, it’s usually more expensive than well, there was guarantee there was one party there. I won’t mention names, but the idea behind it was hey, like just saying, no we we’ve kind of got you on toast on on a few fronts here. We’ve ticked all the boxes I’ve I’ve got all the evidence. You know maybe let’s talk and let’s. Sort of thrash out a a nice commercial deal, something that doesn’t have to allow me to incur legal expenses and courts time and embarrasses time, night time. And at that point in time, they decided to go. No stuff you, Mr liquidator. I’m not discord. You said I’m not coming in to talk to you. And that person had to pay another 50%.

James Flaherty

More so himself and you go OK. And he’s just going, man, you.

Chris Baskerville

Could have walked away with 50% of that money in your own back pocket, but you, you you then just effectively turn from friend to enemy.

James Flaherty

He did also provide some more money for our friends in the legal profession as well, so. The thing I mean you you’re trying to get the best outcome for the investors who’ve lost their money. People who make that harder for you. People need to be your friend, but there’s not. Said support of. Then that makes. You a panic well, because what? What?

Chris Baskerville

You’re effectively doing, let’s call it. Let’s go back to some sort of the out. Of war is. That, you know, should always give your. Opposition a way to exit the battlefield, not believe you can’t. Don’t surround them to annihilate them. Give them and give them away. Retreat and the reason is is. Because as soon as you cut off someone’s retreat point, you are forcing them to go. Down tooth and. Nail fighting, in which case there’s more losses. So if you don’t come and do those commercial deals quickly and with with the liquidator, you’re forcing us to actually have to take action. And that’s what we’re trying to avoid. You’re trying to avoid. Yeah, just. Send a quick settler.

James Flaherty

Yeah, OK. And that’s really interesting so. I think there’s. Been lawyers. You’ve helped along the way. There’s differently investors who, you know, come forward. And there’s a thing called and and the like. A. Is there a committee? What’s the committee? It’s.

Chris Baskerville

Yeah, the Committee of inspection. So that’s a right that’s offered to the creditor body for who would like to form a committee. Within the greater body of creditors? Yeah. And that small committee can then advise the liquidator can resolve some resolutions without having us to call the full body of creditors. So if you could imagine if all our creditors are all over the geography of Australia, it can be a bit inconvenient to physically get them in one room. And the creditors agreed. Well, we should at least have you have five, maybe even 6 creditors form that committee, and they happen to be the largest creditors, the most hurt and grief and the most knowledgeable. Like they knew all the players inside out. So they actually were a great source of information for us. And we’re very grateful to credit a lot of our information comes from credits, or at least they go hey. Here’s some pain points you might. Wanna consider and?

James Flaherty

That’s a better solution than just go and just walking away, because if you walk away, you are less empowered if. Well, don’t. Yeah. Provide you information. Like I said, you’ve got. So there’s a real case of everybody’s contributed to. Help. Bring this to a conclusion so you don’t like that Kim Grace didn’t even to even show up. But you’ve got some level of closure for people. And I mean, they’re still. You’re still. Friday on, actually, you still got things to.

Chris Baskerville

Go. We still have a still have a clay. There’s still out there. And and there’s also we thank the Committee of credits for this or Committee of Inspection. Because one of them came to us and said, hey, did you know that someone has paid the deposit for, uh, a parents place of residence. And we went well, that’s very interesting. And so on the basis of that, our guys went back into the bank accounts and we found it. And so we ended up locking down those monies as well. Now that was something that was discovered. Because of the credited body now. More about the landscape than what we did, people.

James Flaherty

Aren’t going to get their money back. This guys waste too much.

Chris Baskerville

Of it, but there there there was. There was. No money on arrival. So. So there was nothing there that had no, there was no watches, there was. Nothing. So you had.

James Flaherty

To. To pick a little bit and get some level. Of justice and some. Level of closure. It doesn’t give people their money.

Chris Baskerville

I think creditors reactions are always quite interesting and they vary. So not every creditor acts the same way. Some of the creditors that we’re investors, as soon as the liquidation becomes appointed effective. They took the view well. My money’s lost. I’m just gonna close that chapter mentally. I’m just gonna move on. I don’t want to know about the report. I’m not gonna turn out to any meeting. I’m not participating in any way. I’ve done my job. I’m moving on. And then you got the other ones which are. I’ve actually lost the serious money. Almost life savings elements. And I’m gonna follow this thing all the way to the end. And beyond. So it’s interesting.

James Flaherty

And sometimes, really, the people would have showed up at court. That day in Sydney, yeah.

Chris Baskerville

Well, I was told directly from the investor body. Is that yeah, at least one victim impact statement was requested by by by the largest investor. They’ve lost the most amount of money so and rightly so. You know, this guy was effectively through a series of you could probably say smaller cons ended up in a position where a whole life savings is gone. That’s a real victim. That’s that’s someone that’s lost time and time is because if that money did not get invested. I could have leaned on that money to have more time with my kids, and I’ve lost that now. Not so to basically force that person to have to really dig their entire work life again. And then then my understanding further is that that person did have children with some disability. I don’t think any of us will wanna wish on any of. Our children, so you know. Real, real lives are impacted by.

James Flaherty

This. Yeah. So I think that’s a it’s good work you do and I really appreciate your sharing. This story I think it needed to be in this kind of detail. So there were the actions I think people do with the result of this podcast and other things that you do, people do approach you with. Hey, is this scheme? And Chris, what is this game and that and that’s that’s great. People should keep doing that. I think the other thing we’re saying to people is, you know, some stuff looks too good to be true or a thing if it’s got lots of really important booking bits of paper, getting financial advice from a qualified financial planner if you’re an. Parent we need to be careful if. You’re giving the. Right, like accountants aren’t supposed to give financial advice. So.

Chris Baskerville

No, that’s and they need an AFL, at least to be able to do that. But principally, you’re right, Captain.

James Flaherty

Shouldn’t so. So there’s a whole bunch of stuff, and I mean anyway. So I think if in. Doubt get advice from somebody you trust. To bridge out to Chris, if you’ve got anything, if you’ve got any questions about any of this sort of stuff because it’s been a fascinating little mini series, I really appreciate it as I. Say I think if there’s. Anything that is bothers you or something like that. Don’t forget that the the people in Lifeline or. 131114 if they’ve got any concerns or things in this, any of these podcasts can bother. You. OK, let’s leave that one there, Chris. Fascinating. Let’s start. Catch you next week. A reminder that these podcasts are general in nature and do not constitute advice, and they don’t take into account your personal circumstances. So do you think, though, that some of the issues raised might apply to you? You should seek qualified financial, legal or counselling advice.

Audio file
76 Side Hussle or Tax Headache.mp3
Transcript
James Flaherty
Welcome back to the sounds of the Baskerville. I’m James Flaherty here with the great man himself, Chris Baskerville. I’m the managing partner of Jirsch Sutherland in Brisbane. How are you?
Chris Baskerville
Chris, how very fancy. Yeah. Good morning, Duncan.
James Flaherty
What is Fancy is what Duncan Perkins brought in. Hi, Duncan. How are you? Hi. Gentlemen, Duncan Perkins from tax time. We talk about a lot of things in the sounds of the Baskerville, but it’s not. We have a document presented with quite so many Roman numerals on that. Hey, Chris. 
Chris Baskerville
So I think you’re the most prepared to present that you include ads.
James Flaherty
We’ll see where this journey through. I think that’s 12. XI is 12, isn’t.
Chris Baskerville
I studied Latin.
James Flaherty
With someone like Duncan coming to join us, Chris, we’ve got a real. What you did is to talk about where you know where things tax accounting. He didn’t interface with you well though. He really and press get a couple of stories about what you’ve seen. Duncan at the moment. Let’s crack. Yeah. And so one of the things that here I’ve talked a bit about Duncan and obviously, Chris, yeah, I talk about it all the time is when is a side hustle or an investment. Actually like a business, like it’s sort of transitions from something, something you can kind of just sort of sit there and say, oh, it’s a bit of pocket running to something a little bit more serious. It’s like there was a kind of a point you were raising Duncan. Well, you already thinking in terms of some examples of when like what we’re talking about web designers, all I stumbled across a seminar.
Duncan Perkins
From the Gold Coast a few months ago, where? A buyers agent was spooking the wonders of buying investment properties and then leveraging off that investment property after 12 months and then buying another investment property and then buying another property after 12 months through the gained equity and then buying another. Property and so. On and and so it went. And so and then to minimise the amount of land tax. Spread that out over a. Number of states as well and before. You know it. You’ve got, you know, a young couple with a household income with, say, $80,000 each, possibly earning several $100,000 a year, according to this burger from property investments, this spruiker of property buyer’s agent or buyers advocate whatever they would call themselves profess to have think something like 500 properties themself. So what online model? Watch me watch me go, but indicated in the meeting that you can use the things like the 50% discount on capital gains. You can use the six-year rule where you pay no tax on the capital gain of. The asset even. If you don’t live in. It so, so forth it. Just got me thinking. When is this investment play for this young couple really becoming a business? And if it is seen as a business by the Ato, when is the Ato going to turn around and say, well, we see it as a business? You’ve been in quite a good deal of income from your so-called investments. We see it. For the business and therefore discounts like the 50.
James Flaherty
And will go. And that’s really interesting because I can think about sort of someone who might have a franchise or. They own a gym or. Something like that. Chris. That. Yeah, that’s quite obviously a business, isn’t it? Like you’d sit there and go. That’s supposed to be a separate kind of person. Legal entity, isn’t it from?
Chris Baskerville
Yeah. Well, imagine there’s probably. 1:00 to 12:00 in this year. As to what would make a business compared to a hobby, in other words. If I set up a gym in my own. Garage and invite a few mates. Around. Yeah. Is that a business or as a? Hustle. But if we’re talking about scale and tensions to drive a profit, yeah, well, the, the, the owner of the gym might be making a net profit of $30,000 a year.
Duncan Perkins
To be. Honest. Yeah, but they might be making 300,000. A year from their investment portfolio and property. Which is the business which?
James Flaherty
Is the minimum. OK, so let’s say the property is, yeah, so the property, because this is the thing you’re a gun tax accountant. We as accountants can’t provide financial advice, but you certainly can help people manage their tax. So this particular.
Duncan Perkins
Is it a significant commercial activity? Ohh I would say.
James Flaherty
My property look and then. So I’ve got three or four homes have one in NSW. I’ve got one in Queensland and a couple in South Australia and I live at Castle. Mum and dad, yes. Yeah, I mean, you know, yeah, OK, yeah.
Duncan Perkins
Alright, you’ve got knowledge and skill. You’ve got commercial sales of Proligent skill.
James Flaherty
In what sense in in what you’re.
Duncan Perkins
Doing you know.
James Flaherty
You’re running script. I’ve been to the striker thing, you know, follow the sprinklers. Here’s my 12 fold path to death. Eternal happiness. OK. Yeah. Well, so that’s even if I didn’t make it up myself. If I’m following the Duncan.
Yes.
James Flaherty
The Speaker of the Golden Success Path they got telling.
Duncan Perkins
Repetition and regularity of activity. The activity is. Or will be. Profitable and on a car. So this is under tax ruling 90. 711 so you know, we accounts we love to throw out three letter acronyms all the time. Yeah, that’s right. As we say, there’s probably too many TLA’s in in our vocabulary, but to me it’s just a a bit of a warning I.
Speaker
No.
Duncan Perkins
Know that the. Ato have systems and flags in there in in play. And I am sure that they’re picking. Up these types of things. When Bitcoin came to market and people were investing in Bitcoin.
Chris Baskerville
The flag of.
Duncan Perkins
Bitcoin pops up with yeah, sit down and do their tax return. Also, the sale of property through any office of State revenue or or titles office will flow through to the tax office.
Chris Baskerville
I think that’s interesting thing and I I was hearing this from 2 litigators that were. 20 year veterans in inside the Ato. So in other words, any litigation involving the Ato, it would go through their office and their number one comment that they were so strenuous on having now left the tax office and now kind of in public practise was and you, you can’t beat the DHS data. Like the data matching is is outstanding from the AG’s perspective and what I think you were given us an example today of where land was being transmitted or transferred as a result of death and then that information flowing to the Ato almost before the tax payer. Was ready to deal with the.
Duncan Perkins
Estate. Yeah. So, I mean, one of the other areas that I heard at this brokers conference, it kind of makes sense too. So you know, I patted him on the. Back, you know, quietly without him knowing on on the matter. And and I. And I think you know, he he makes a very good point. You you’ve gotta look at the yield of your investment property. So if you buy an investor probably for say $500,000 and it’s giving you a year at 5% a year. Which is $25,000 rent and that’s. Gross. It’s pretty running yield when you think, yeah. Yeah, compared to, say, shoving your money in a term deposit, not having to do with property management or anyone like, that’s right. So anyway, you look at that and.
James Flaherty
Yeah.
Duncan Perkins
Then you go well. Hey, this thing’s gone from 500,000 to $700,000 in the last three years, which is done in Brisbane and. Probably not Melbourne, but definitely Sydney and other places like that, so Perth and so you go well, hang on, the yield is rubbish now because I’m still only getting let’s say I’m getting 30 grand a year in rent. But I’ve got. A property worth 700,000. So my yield has. Gone down. Why wouldn’t I then sell that? So I’ll sell that pick up the 50% discount. Possibly roll money out of my carrying forward concessional contributions so I can then even further reduce my tax and then all of a sudden the AT and go hang on, buddy. Yeah, and 30 grand a year as a gym consultant or whatever or self. Employed, but you’re earning.
Speaker
Yeah.
Duncan Perkins
Real money from a. Real business over here in investment properties.
James Flaherty
I don’t know.
Duncan Perkins
I don’t think the ATM’s gonna be so kind in discounting taxes in that space, I think.
Chris Baskerville
Look out. So let’s just say I was one of the persons that this burgers conference. I drink the Kool aid and I’m following the path. Yeah, let’s say we gave five years down the track and I probably sold 2-3 properties. What do you think the ramifications could be if the Ato? Goes hang on. I think you’re actually running a systematic business here.
James Flaherty
Well, I think you have said a lot.
Duncan Perkins
Is you get a puppy in a corner. Even though it’s a puppy, it may still bite and that would be the same for you if you got burned by taxes of say, 2 or $300,000 and you were in a huge urging of the Ato over an idea that was passed on to you by a spooker some five years ago. You’re gonna. Buy. You may look and sound and smell like. A puppy. But you’re gonna buy it? And. You’re going to attack those that have literally lost you the money, which will be those advisors around you. So it may be your accountant, it may it that that sat there. And let you. Work through this journey over that last five years and and sat there blindly saying, yeah, Chris, you’re. Doing really well blah. I just think that if there’s any advisors out there that are seeing this.
Speaker
Yeah.
Duncan Perkins
Festering like a cancer. Maybe you should warn the likes of yourself that are going into this investment journey of the dangers of because you’re never gonna be able to sue or buy the spooker.
Chris Baskerville
I doubt it. No, no, because they know well you said then usually not licenced. In any way.
Duncan Perkins
We don’t have to be, yeah. They just say, oh, it’s property. You know, like if you what?
Speaker
You see.
Duncan Perkins
It does. I’m just. Quoting a few things out of tax and.
James Flaherty
You know, and there’s a difference.
Chris Baskerville
Between an agent that requires a licence not to sell. Versus someone that’s actually there to market.
Duncan Perkins
It’s a little bit like, you know, if I take you to the races and you know nothing about horses, and I apparently know everything about horses and the trainers and the jockeys and whatnot. And you’re being given a budget by your beautiful wife of, say, $200.00 and three beers for the whole day after I say to you. You walk in and I say just follow me, Chris. I’ll put $1000. Down on everything. You just put 10 bucks down and everything. And this is what happens. Is that you will then sit. There and go. Duncan just won 12:50 on 1000 bucks and I’ll put 10 bucks on it. I’m gonna follow him on the. Next one how long is? It before you start putting your whole $200.00 down and then cruising to the ATM and pulling money out of the ATM. And then you’re following me. Now I may have win, win, win, win, win War until about 3:00 in the afternoon. And then a couple of losses. Was it my fault that you started ripping all of your money out? No. And that’s kind of what happens in financial advice. That’s kind of what happens in regards to the mortgage world is that. You drink the Kool aid and you get hooked on it, and then it’s no one else’s fault but your own cause. You know if your wife rings me up and says, what the hell did you do to Chris? He drank more than 3 beers, but he cleaned out the ATM. Yeah, OK.
Speaker
You.
Chris Baskerville
OK.
Duncan Perkins
Hey, you know, like he followed them, but.
Speaker
They.
James Flaherty
I didn’t force him to, so this is an important because you can’t. Give financial advice. As an accountant, you can give it as a financial planner or a financial adviser. It’s about our so we always say, you know. This is general advice. You should always get advice that’s specific to your circumstances, but you certainly can warn. Hey, say if I look at 40 to 9, I axe is 9.9 sure, yeah, horse racing makes me thinking right. I’ve only just doing this houses. Yeah, and I’ve got a bunch of houses, but you know.
Speaker
Yeah.
James Flaherty
I’d do a personal training. Yeah, for my job. Yeah, yeah, that’s my job. Yeah. It’s so it’s so. Well, it’s this house thing is just a hobby. And you gotta work. Nice. Nice. Nice. Yeah. Nice. Work. Because it’s as you said.
Duncan Perkins
Before long, yeah, it’s real money. Yeah. Yeah, and. And and it’s. I think it’s going to get fairly ugly in this space because there’s a lot of people jumping on this bandwagon a lot.
James Flaherty
And this is Jonestown. You’re kind of trusting in bankruptcy. Has is the interesting one, Chris, cause with what these will be. When are these likely to be on their personal names or? These. Yeah.
Chris Baskerville
Well, it’s the only way to get some of. These concessions isn’t.
Duncan Perkins
It well, no. So the concession will pass down through a trust structure. So there’s a lot of finance brokers. I’ve actually seen one which is very ugly and it was a number of years ago. And the person drank the Kool aid. I like that. Say him and his wife. Dragged as much equity out of their quality Brisbane homes as they could to then on. Lend that money to a trust structure which is a discretionary trust and set up a company trustee for a separate company, trustee for both trusts. And they had these two trusts going and those trusts then went to the bank and the bank said no. But you know you do not. Have the income to support buying properties in mining towns, which was Moombah and Dysart one up near the. Top of WA so. And they ended up with about $2,000,000 worth of lending through these trust structures, the. Only way that they could. Do it is that one trust application went through. To the bank and then another trust application went through to the bank. So it was seen by the bank as two separate legal entities. And that was all one. And so I looked at the original loan applications that the client put together cause they basically were as close to bankruptcy as you.
Speaker
Yet.
Duncan Perkins
They sold their homes in Brisbane to pay down the debt and there’s still debt in the trust of well over $1,000,000 and the mining company properties are all gone because they boom and bust, right? So called income, Chris spread to them, possibly by the finance broker at the time was or, you know, made or buyers agent for mining properties, I don’t know. Them, they would have said to them all of the capital gains, all of the fortunes that you will make out of this. We can income, split it down through the trust, down to you and your wife. But clearly you’re running a business. So maybe you wouldn’t get those discounts. And anyway, so then you’ve got all of those losses. I’m talking $1,000,000 of losses sitting in these trusts forever. Yeah, right. Forever. And it’s it’s so sad. And it, you know, broke the relationship up and and and threw straightforward. And the broke is not responsible because the broke is basically saying, well, you signed the documentation and the Bank’s not responsible because they said well. We received some documentation from the client so and clearly they knew it was fraud. So one bank said no, that bank owns another bank under another title. If you know what I mean. And that bank, right the line? Yeah. Well, hang on a SEC. Your mother ship.
Chris Baskerville
The mother ship said no, no, Sidley said yes.
Duncan Perkins
Yes. Yeah. Squeaking these things through.
Speaker
Add.
James Flaherty
Well, thanks, Duncan. That’s there’s a fair bit to absorb. And Matt, who’s that word unpacked? But there’s a bunch of new rules for your post on the website. So I think this calls for sort of some kind of Baskerville way to wrap this one up. Do you know what you’re doing if you? Don’t know what do you got.
Chris Baskerville
The spruce goose. Well, that’s in the jazz. And and and. In the fall, out by the accounts, I think it’s only appropriate we go with another Mark Twain quote, you know, which is it’s easier to fool people than to convince them that they have been fooled. Yes. OK. Hey, thanks both with you. I really appreciate you. Great to have you in Duncan and and also in Chris. Thanks again. See you next time.
James Flaherty
A reminder that these podcasts are general in nature and do not constitute advice, and they don’t take into account your personal circumstances. So, if You think, though, that some of the issues raised might apply to you, You should seek qualified financial, legal or counselling advice.

James Flaherty

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