Question

Jacky Oasis is a beauty consultant at Goodlook Ltd, and she owns 100% of the shares in this company. The company pays her a salary of $60,000 p.a. She has a long term relationship with John Kennedy and they plan to get married one day. John does not hold any shares in Goodlook Ltd. John’s father, Ken has a trust, the Barbie Family Trust, which owns several residential properties in Auckland. All the properties were bought in 2012. Ken is the settlor and trustee of the Barbie Family Trust and John and his sister are the beneficiaries of the trust. The trust is a complying trust and was set up 10 years ago. John and his friend Doreen own Milo Ltd (and only Doreen is an employee) with John holding 60% and Doreen 40%. Milo Ltd recently loaned $100,000 interest free to Barbie Family Trust. Is Milo Ltd associated with Barbie Family Trust for land transaction purposes?

Answer 1

Yes Milo Ltd is associated with the land transactions of Barbie Family Trust because Milo Ltd is a related party of the trust. John has direct interests in Barbie Family Trust and since he owns 60% of the shareholding of the company and the Trust belongs to John’s father thus, there is direct relationship between the major shareholder of the company and the trust. Hence, the Milo Ltd by virtue of the ownership of John is related party for the trust and thus, associated with the land transactions of the Trust.