Introduction to trusts


What is a trust?

A trust is not a legal person, like an individual or a company. It is a legal relationship that involves a legal owner (the trustee) holding property for the benefit of other people or entities (the beneficiaries). This relationship is established and governed by a trust deed. In all trusts, the trustee:

  • holds the legal title to the trust property; and
  • holds the trust property for the benefit of the beneficiaries of the trust or for a recognised legal purpose such as a charitable purpose.

For example, in the case of a family trust, often the parents or a specifically established company will act as a trustee that legally holds property for the benefit of all the family members, who are the beneficiaries.

read on… 


1 Trust Resolutions


Key points

  • The ATO’s practice of allowing trustee resolutions to be made in July or August was abolished two years ago;  so 30 June means 30 June – expect no leniency from the ATO.
  • The trust compliance process with your clients should be starting now.
  • Many clients are still uncovering gremlins in their trust deeds and making mistakes – read the deed and deal with problems before it is too late.
  • Making trustee resolutions and recording them carefully is important – they can make or break your client in an audit.
  • The streaming rules are complex; it’s easy to make a mistake.

read more

Understanding Trust Law 1

The judgment in FCT v Clark and Anor [2011] FCAFC 5 (Clark) and subsequent withdrawal of the Commissioner’s Statement of Principles on 20 April 2012 created uncertainty on the ATO’s view on resettlement of trusts. We discussed many of these points in our Taxation Updates of 16 September 2011 and 3 May 2012. On 24 October 2012, the Commissioner released TD 2012/21, confirming his position in relation to CGT events E1 and E2 and the creation of a trust over CGT assets. Some changes have been made from the previously released draft TD 2012/D4 in finalising this TD.

read more