Forming a Trust or Fund
Because there is no “one size fits all” type of trust you need expert advice to ensure the type you choose will achieve your objectives.
A trust is really an agreement or promise by a person or company to hold assets for the benefit of another. Technically the trustee has legal control and can buy or sell the asset but does not have the benefits of ownership. It is the trustee’s name that appears on all legal documents and the beneficiaries on the other hand do not have control yet have the benefits of ownership and income.
A trust separates ownership and control. This allows the assets to be protected and the profits to be taxed in the most cost effective way. For example if you have a large investment in plant and equipment or intellectual property these should be held separately from the trading entity so these assets are protected.
One of the most important aspects of forming a trust is to understand the different types of trust so that what ever you undertake will achieve your objectives.
Superannuation Fund – The purpose of this is to manage superannuation for the benefit of the members. While an increasing number of people are part of a self managed superannuation trust (SMSF) there are a large number of strict legal requirements that define what members can and cannot do with these.
Discretionary trusts – For parties who are related or non “arms length”. Typically set up where a family member wishes to distribute income to family members but retain control of the assets during their lifetime.
Unit trust – This allows non-related people to have the benefit of
a trust. Unit holders have a number of units in the trust and the
distribution of income is on the basis of the number of units held.
Hybrid Trust – This is a mixture of the features of a discretionary and unit trust. For example this may have the assets held on a unit basis and the income distributed on a discretionary basis.
There are also positives and negatives about forming a trust and this is a further reason why you need professional advice before doing so.
Advantages of a trust may include:
• 
Taxation advantages depending on current tax law
• Ability to stream incomes
• Limited liability
• Asset protection
Potential disadvantages include:
• Possible implications for capital gains tax
• Distribution of tax losses
• Establishment costs and administration costs
Apply and order your trust here:
Superannuation Fund |
Discretionary Trust |
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To order your trust, simply choose the type you want from the range above, download both the Order Form and the Tax Invoice, fill in your details on the Order Form, complete the Tax Invoice and fax both to us on 03 9923 9400
If you are unsure and would like expert help with any aspect of trust formation or administration please don’t hesitate to give us a call on 03 9824 0911 or email us at info@taxaffair.com.au