Can the unit holders negatively gear their investment in a Cleardocs Hybrid Trust?
No, the Cleardocs Hybrid Trust deed does not allow negative gearing by unit-holders in respect of funds borrowed to purchase those units -however, the trust may be able to borrow in its own right and to claim a deduction for interest costs against its own income. The reason the trust does not allow negative gearing is because the trustee has a discretion to distribute income: • Among the trust’s unit-holders out of proportion to their unit holdings (provided no unit-holder objects); and • To people other than the actual unit holder provided that they qualify as beneficiaries by virtue of their relationship with the unit-holder. These features mean that it is unlikely you can claim a deduction for expenses associated with owning units in the Trust.
