Many businesses and family groups have an Australian trust in their legal structure but while it is common, you should remember how trusts really work. Trusts are complex. It is an equitable relationship between a legal owner or trustee and the beneficiaries under which the trustee holds the assets for. A company is a legal entity, but trusts are not. All actions are undertaken by the trustee but a trust is considered a taxpayer for tax purposes.
Unit or family trust
The types of trusts include unit trusts where the interests of the beneficiaries are utilised in contrast against discretionary trusts where these are at the trustee’s discretion. A hybrid trust is a combination of the two. Tax laws include the concept of fixed trusts and non-fixed trusts. Discretionary trusts and hybrid trusts are non-fixed trusts but not all unit trust are automatically fixed trusts. These are important in the utilisation of tax losses and franking credit distribution. Family trusts make a family trust election.
A trustee can be an individual, group or company but it is common to use a special purpose company for this to distinguish the trust property from the individuals who control the trust. The trustee administers the trust daily and they make decisions in terms of investments, income distributions, etc. in accordance with the trust deed.
As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.
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Sky Accountants Ballarat
Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Gisborne & Macedon Ranges
Phone: 03 97444522
Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437