Trusts

A Trust is basically a relationship where the Trustee(s) conducts business and allocates income to certain beneficiaries. There are a variety of Trusts available depending upon the individual or business needs. These can include Fixed or Discretionary Trust, Unit Trust, Hybrid Trust, Family Trust etc.

For a Trust to exist a Trust Deed must be established along with the Appointer, Trustee, Settlor and Beneficiaries. A Trust is governed per the terms of the Trust Deed, which is prepared at the time of establishment of the Trust.

A Trust would have its own TFN & ABN. A Trust normally doesn’t pay tax rather the beneficiaries that are distributed the income are responsible for paying tax at their marginal tax rate and need to include the distribution in their tax return.

It is an ATO requirement that appropriate Trust distribution minutes are kept. The minutes must be in agreement with the Trust Deed otherwise the ATO can rule the minutes to be ineffective of how the income has been distributed to beneficiaries and the Trust’s profit may be taxed at the highest tax rate.