Family trusts v Companies, OpenAI's Astra & bonds are back

SPEAKER_1 (0:00)

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Owen Raszkiewicz (0:45)

Hey there, here's a quick note. This podcast contains general financial information only. That means it's not specific to you, your needs, goals or financial objectives. So don't act on the information until you've spoken to your financial planner. You'll find our full disclosure, disclaimer and link to our financial services guide in the show notes. Alrighty, it looks like we're about live here on the Australian Investors Podcast. It's a Two Cents edition.

But in this instance, we've got more cents in the studio than ever before. That is because I'm joined by James Phelan, the co-head of advice at Rask Advice here on the airways. Mate, how are you doing?

James Phelan (1:23)

I'm doing extremely well. It's a nice comment you've inserted at the start there, but I'm not sure how true it is.

Owen Raszkiewicz (1:30)

We'll see about that. It's always a bit of fun when you and I chat, mate, and hopefully, we're going to get into the technical weeds a little bit today on some of the changes that have come through about tax structuring, about tax in general, following what was a pretty shock and awe budget to then go back and change a few things. We're going to cover a bit of that today with family trusts, bucket companies, all that sort of stuff.

We've also got plenty of questions sent in advance, questions about bonds, questions about, are we worried about the US debt crisis if there is one, some new investor questions and so on and so forth. But first of all, you and Adrian, Adrian being our producer behind the scenes here, just alerted me to the price of the new iPhone, three and a half thousand dollars for a foldable iPhone. Are you going to get one?

James Phelan (2:21)

Absolutely not. No way. Can I justify spending that much on a phone?

Owen Raszkiewicz (2:26)

Well, I was listening to a podcast on the way into the city today.

It was a podcast that was a throwback episode. This series has been going for a long time. It was with David Gardner in the US, and they went back to look at their podcast from 2016, so 10 years ago, and that was when the Apple iPhone 7 had just launched.

At the time, Apple stock was massively underperforming, hugely underperforming, right? And the big reason why was because people were saying, no one's going to pay more than whatever it was at the time for an iPhone. And this was just before the first Apple Watch and all that sort of stuff. And now look at us, you know, now we're here and it's $3,500 for an iPhone. I don't know what original Apple iPhone 7 would have cost, but probably like, I don't know, it's $800, something like that maybe. So I wouldn't bet against them. And subsequently to that James, the Apple share price went up 1100%. So don't know if the new CEO will be able to pull that off, but it's interesting anyway.

What else has been making news in your world, mate?

James Phelan (3:36)

Not a huge amount. A couple of kind of flip flops with the budget changes. We've seen a couple of announcements come out post the May budget and the biggest one being on Thursday last week, Jim Chalmers has come out with another change to the way distributions come out of a discretionary trust. So as a recap of what came out of the budget, it was essentially this minimum 30% tax that was going to apply to all discretionary trusts. And they've now come out and realized there may be a few issues with that.

State legislation covers trusts, and there was going to be some stamp duty that might apply to anyone that was trying to utilize the rollover relief from a trust to a company. Some people significantly more affected than others. So essentially, what he's come out and said last week is that if you can pre-define who you are going to distribute to, you can avoid that minimum tax. That kind of takes out the discretionary aspect of the trust to begin with. But it's a fairly major flip from what the budget originally announced.