12 Comments Commercial law, litigation, contracts, IP, property law
I think youve got this wrong the trust usually owns the land and buildings.
The trust then gets income from rent it chages to a company which is distributed via the trustee company to shereholders who are usually beneficiaries.
There is generally but not always a separate company that is trading.
I would definitely see an accountant to sort this out.
Depending on what a trust does it will need the things you mentioned and so will a company that is trading but I suspect you will need a second company to trade have staff etc to get asset protection.
I think Rambler is a bit confused. Trusts do often own property, but this is not what css8 is asking about. I think css8 is doing things correctly. Running a business thru a trust is a good idea.
A trading company or trust should never be a trustee. One of the benefits of trust is asset protection. If your trading entity were to get into trouble, your assets in the same entity will possibly be up for grabs.
The company, as trustee, won't be trading in its own right, so it shouldn't need an ABN. But the company will still need to lodge a tax return - it should be a nil return, so it will need a TFN.
A trading company should never be a trustee. But in this case the business will be operating thru a trust, so the trust is trading. This is ok as long as the trust doesn't own any other assets.
A trading trust should have a trustee which does not do any other role.
Any other assets such as buildings, machinery etc should be owned by a separate trust with a different trustee. This trustee should never trade.
What you would want to do is separate things in case a trading business goes under.
Does anyone know where I can find information on corporate trustee roles and responsibilities (is there such a thing).
What is the benefit of shareholders vs beneficiaries? I undertand that beneficiaries have no say in trust matters and believe that the director of the corporate trustee was empowered to make decisions on trust. What would the role be of the shreholders?
Please let me know if my questions are not clear.
I'm wondering if anyone could please offer their advice.
I am setting up a pty ltd company to act as trustee for a discretionary trust. The trust will be puchasing an investment property and also trading shares.
From what i understand i need to set up my share trading account, and also purchase my property in the name format "ABC pty ltd as trustee for XYZ Trust."
Can someone please tell me whether i need to apply for a TFN, ABN and register for GST for Both the Company AND Trust?
Also, do i need to set up a bank account for both the company and trust in their own names? If not and just one is required what name do i set up the bank account as - ABC Pty Ltd as trustee for XYZ Trust?
I'm confused about the details of this part of the set up, so if someone could help i would much appreciate it.
You are all confused. A trust being a trust in Australia cannot trade as its own because it is not a legal entity. A corporate trustee comes into place as the legal entity to trade and to carry on day to day business on behalf of the trust. A trust does not lodge tax return, pays no tax while the corporate trustee does have to lodge a tax return. the reason why we dont have individual trustee instead is because if the individual trustee dies, it is easier to transfer the shareholding of a dead person in the company to another person than to try to transfer a dead trustee to another trustee.
Excerpts from the Australian Tax Office website (http://www.ato.gov.au/businesses/content.asp?doc=/content/66952.htm&page=4&H4)
* A trust must have its own tax file number to use when lodging its annual income tax return.
* Whether or not a trust has a tax liability depends on the type of trust, the wording of its trust deed and whether the income earned by the trust is distributed (in whole or in part) to its beneficiaries. Where the whole of the net trust income is distributed to adult resident beneficiaries, the trust will have no liability.
* If a trust is carrying on a business, each year all income earned by the trust and deductions claimed for expenses incurred in carrying on that business must be shown on a trust tax return. The tax return also shows the amount of income distributed to each beneficiary.
GrantDuck, That link is no longer valid. I was wondering if you know where I could find the answer to my question I posted here: https://www.aussielegal.com.au/board/post/question-regarding-trustswealth-management or, if I was to restate the question based on your bullet points, if the trustee decides to invest some of the profits (as opposed to distributing), will these investments reduce the net trust income? "