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Estimated Time to Build: 4 - 5 Minutes
Jurisdiction: Australia Wide
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Yes of course a Trustee can wear more than one hat.
Let's say that Helen is the bare trustee. She can still hold bank accounts for herself personally. She can still go to work and live her life. By being a bare trustee she is just taking on another job.
What about when the Trustee is a company? Same thing as above. The company can hold down many jobs and roles. The company could be trustee of many trusts. The company could trade and own its own business personally - as well as hold the job of Trustee.
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The Trustee holds the asset on trust for the beneficiary.
It may appear to all the world that the owner is the Trustee, but the beneficial owner (true owner) is the Beneficiary.
The Trustee is bossed around by the Beneficiary.
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Say you purchased property in your Super Fund, but you didn't do a Declaration of Trust. Now what?
You can't just go and build a Declaration of Trust. The Trust relationship already exists and building a Declaration of Trust may be a resettlement. You may have to pay state duty and Capital Gains Tax on the transfer.
What you need to do is prepare a Deed that acknowledges that the trust relationship existed from the date of the purchase.
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A 'trust' is merely when someone holds 'something' for you on trust.
The 'something' may be property or shares or any other asset. Usually when you own an asset you own both the 'legal' and 'beneficial' interest. However, with a trust someone holds the 'legal' ownership and another person or group owns the 'beneficial' interest.
The Trustee already has the asset in their name. At all times the asset has been held beneficially for the beneficiaries. This agreement is to merely acknowledge that the true beneficial owner is the beneficiary.
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You will need to prove to your state's revenue office and the Australian Taxation Office that the Trustee has always been holding the asset in trust for the beneficiary. You can help prove this by showing such things as:
1. the original offer to purchase states "Trustee as trustee for the Smith Self Managed Superannuation Fund" (duly stamped)
2. there is a note or minute in the company secretary file noting the trust relationship
3. cheque butts
If you fail to have sufficient documentary evidence then you may be required to pay state duty again on the value of the asset. Depending on the value the asset this can be quite high. There may also be Capital Gains Tax.
Finally, if you have a Self Managed Superannuation Fund ("SMSF") and you can't prove it, then you may have a non-complying SMSF. This also has grave and expensive consequences.
You need to check with your accountant and your lawyer to ensure that you have adequate stamped written documentation proving that the true beneficial owners are the beneficiaries.
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This document allows you to enter either:
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The trustee is the registered proprietor noted on the land's Certificate of Title.
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The Trustee is the person that holds the asset on behalf of the Beneficiary.
The Trustee is a mere puppet of the Beneficiary. The Beneficiary is the "true" or "beneficial" owner.
At any time the Beneficiary can direct the Trustee to transfer the asset to the Beneficiary.
The Beneficiary is in control. However, to the world it just looks like the Trustee "owns" the asset. However, the true owner or beneficial owner is the Beneficiary.
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Yes, any legal 'person' can be a Beneficiary.
Don't forget to put in the ACN. If the company is acting in another capacity, you should write this here. I.e. "Smith Pty Ltd ACN 123 456 789 as trustee for the Smith Superannuation Fund".
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Yes, that is fine. For example, in a SMSF with two members/trustees, the Beneficiary could be described as:
Beneficiary 1: "Colin Smith as trustee for the Smith Superannuation Fund".
Beneficiary 2: "Jamie Smith as trustee for the Smith Superannuation Fund".
The trustee entered on the previous page "Who are the Trustees" would be described as:
Trustee 1: "Colin Smith"
Trustee 2: "Jamie Smith"
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What if the Trustee of a family trust purchases some property on trust for the Family Trust. What happens if this was not recorded on the original Offer and Acceptance or Exchange of Contracts?
This document will help here.
The Beneficiary is the "ABC Pty Ltd ACN 123 456 789 as trustee for the ABC Family Trust"
The Trustee is the "ABC Pty Ltd ACN 123 456 789"
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This document allows you to enter either:
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Only enter a capacity if the Beneficiary is an entity such as a Self Managed Superannuation Fund or a Family Trust. i.e. "Atkins Pty Ltd ACN 123 456 789 as trustee for the JC Atkins Superannuation Fund".
If the Beneficiary is an individual or company in their own right, there is no need to enter a capacity. For example, Jillian Shadbolt purchased a car in 2013 for her daughter Sophie Shadbolt. The beneficiary would simply be entered as "Sophie Shadbolt".
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The asset can be anything you want. It may be shares, property or something else.
The asset is the subject of the trust. The Trustee holds the asset for the benefit of the Beneficiary.
If the asset is land then you need to describe the property as fully and accurately as possible. Check your Certificate of Title for all the details. Depending on the State you live in, the description of the property should look something like this: "Lot 4 on Plan 309 being the whole of the land in Certificate of Title Volume 2221 Folio 4956 being the property known as 24 Waverley Street, Bicton, Western Australia"
If you the Trustee holds shares then fully describe the shares: e.g. 24,000 C Class ordinary shares in Morley Pty Ltd ACN 234 779 387
Do not place a full stop or any other punctuation mark at the end of describing the asset.
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If the asset includes land you need to describe the property in full. All information about the property is located on your Certificate of Title.
Depending on the State you live in the description of the property should look something like this: "Lot 4 on Plan 309 being the whole of the land in Certificate of Title Volume 2221 Folio 4956 being the property known as 24 Waverley Street, Bicton, Western Australia."
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It is very important that you have supporting evidence to show that at the time of purchase you intended to purchase the property as trustee, rather than purchasing it for yourself.
Examples of strong supporting documentation usually include:
• An Offer of Sale and Purchase which states that the property was bought as trustee for the beneficiary. For example, the purchaser was noted as "Waycona Pty Ltd as trustee for the Jon Conway Super Fund."
• Notes or minutes in the Company Secretary file noting the trust relationship;
• Cheque butts showing that the purchase moneys came from the Beneficiary;
• Credit card statements showing that all fees, duties, rates etc relating to the asset were paid by the Beneficiary; and
• Contemporaneous file notes and correspondence noting that the beneficial owner is the Beneficiary.
If you fail to have sufficient documentary evidence then you may be required to pay state duty again on the value of the asset (called "ad valorem" duty). Depending on the value the asset this can be quite high. There may also be Capital Gains Tax.
Finally, if you have a Self Managed Superannuation Fund ("SMSF") and you can't prove that the asset was acquired for the SMSF then you may have a non-complying SMSF. This also has grave and expensive consequences.
You need to check with your accountant and your lawyer to ensure that you have adequate stamped written documentation proving that the true beneficial owners are the beneficiaries.
This hint is provided by Law Central Legal.
You will need to prove to your state's revenue office and the Australian Taxation Office that the Trustee has always been holding the asset on trust for the beneficiary.
If you fail to have sufficient documentary evidence then you may be required to pay state duty again on the value of the asset (called "ad valorem" duty). Depending on the value the asset, this can be quite high. There may also be Capital Gains Tax.
Finally, if you have a Self Managed Superannuation Fund ("SMSF") and you can't prove it, then you may have a non-complying SMSF. This also has grave and expensive consequences.
You need to check with your accountant and your lawyer to ensure that you have adequate stamped written documentation proving that the true beneficial owners are the beneficiaries.
This hint is provided by Law Central Legal.
The Australian Tax Office requires you to have an Acknowledgment of Trust to say that the Trustees hold the property on trust for the Self Managed Super Fund.
SMSF Trustees must ensure that the fund's assets are held in a legally recognised ownership arrangement. This generally means the assets must be held in the name of the trustees on behalf of the fund. In most states and territories this is not possible. Therefore a caveat, instrument or declaration of trust must be executed for the asset.
The ATO notes that the registration of a caveat together with a declaration of trust on title is sufficient to demonstrate the ownership of real property assets of the SMSF and will satisfy the standard of subregulation 4.09A of the Superannuation Industry (Supervision) Regulations 1994.
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Please note that if your asset was purchased prior to the date that any of the above Acts came into force, then you will need to apply for the duties exemption based on the previous Act.
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"Ad valorem" means "at value". When you pay ad valorem duty, this means that you are paying duties at the full unencumbered value of the asset. This can be a lot of money, especially for real estate.
Depending on your circumstances, there may be exemptions to paying ad valorem duties on assets when there is an acknowledgement of trust. The exemptions vary on a state by state basis.
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If you select "Yes", then a condition precedent will be written into your Acknowledgement of Trust document.
A condition precedent means that your Acknowledgement of Trust will not come into effect unless your state's revenue office assesses duty on the document as per the duty/stamp duty exemption you specified.
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Most states and territories allow some form of exemption from full duty where there is an acknowledgement of trust (however whether it is available to you depends on your circumstances).
Law Central cannot give you legal advice as to whether you are eligible for duties exemptions or reductions. If you are unsure, you should seek legal advice or take advice from your state's Revenue Office.
To see for yourself whether you qualify for an exemption, check your state's legislation:
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Apparent purchaser duty exemptions are available in WA, NSW, Vic, Tas and the ACT.
Essentially, they allow for concessions to duty (or in the case of Victoria, no duty at all) where the Trustee's name is on the Certificate of Title, however the Beneficiary was the 'real purchaser' as the Beneficiary:
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You have already selected a condition in your deed that if your state's revenue office deems that ad valorem (at value) duties are payable on the Acknowledgement of Trust, then the Revenue Office must return the document to you unstamped.
Additional evidence (by way of documentation supported by statutory declaration) must be lodged with the Acknowledgement of Trust to prove that the asset was always meant to be acquired by the trustee on behalf of the beneficiary. You should seek guidance from your state's revenue office regarding your evidentiary requirements for your situation prior to signing the Acknowledgement of Trust. It is important that you give the Revenue Office the correct documentation, as they may charge you a fee for requisitions (or worse, refuse to acknowledge your transaction).
At the time you lodge all the documents at your state's Revenue Office, you will also need a letter stating the section of your state's Duties Act under which you are claiming an exemption from ad valorem duty.
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A requisition is a question from either your state's Revenue Office or Land Titles Office. It can be a question regarding your documents lodged or a request to lodge further documents to satisfy their requirements. These government departments will charge you a fee to ask you these 'questions' and will give you a time-frame to answer these questions (usually 10-14 days).
To avoid getting requisitioned, you should satisfy yourself that you have lodged all the correct documentation at the time of lodging. If you are unsure whether you have lodged all of the correct documentation, then seek advice from your Accountant or Lawyer or you can telephone that government department to check their requirements.
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For example, Mary and Bob are the Trustees of the MaBob Superannuation Fund. They purchased property in Western Australia in 2011 in their SMSF. The law in WA does not allow a SMSF to be listed as the owner of a property on the Certificate of Title. Therefore, Mary and Bob were listed on the Certificate of Title. At the time, they made sure that the purchaser listed on the Offer of Sale and Purchase for the land was "Mary and Bob as trustees for the MaBob Superannuation Fund." The MaBob Superannuation Fund provided the deposit and all of the purchase money for the purchase of the property. Since that time, the MaBob Superannuation Fund has also:
Mary and Bob have now received advice from their Accountant that they need to prepare an Acknowledgement of Trust and lodge a Caveat over the land to satisfy the requirements of the ATO (the ATO enforces the SMSF law). Mary and Bob are worried that they will need to pay full duty again on this transaction, however they are assured by their Accountant and Lawyer that they qualify for the "Apparent Purchaser" duty exemption contained in section 117 of the Duties Act 2008 (WA).
When building the Acknowledgement of Trust document at LawCentral, Mary and Bob select that they are eligible for an Apparent Purchaser duty exemption. They then lodge all documents at the Office of State Revenue (along with supporting evidence by Statutory Declaration). The Office of State Revenue agrees that the transaction falls within the apparent purchaser duty exemption and assesses duty on the transfer at the nominal rate of $20. This saves Mary and Bob tens of thousands of dollars. As the condition precedent to the Acknowledgement of Trust was met (i.e. that the Office of State Revenue assessed the Deed at nominal duty) then then Acknowledgement of Trust Deed is now in full effect.
To complete the transaction, Mary and Bob pay the $20 duty and then then lodge all documents at Landgate. Landgate records that the SMSF has a caveat over the property. The ATO later audits the MaBob Superannuation Fund and is satisfied that the property is properly recorded.
What if the Office of State Revenue assessed the Acknowledgement of Trust at full value instead?
If the Office of State Revenue looked over Mary and Bob's documents and decided that they did not qualify for the 'Apparent Purchaser' duty exemption, then the Office of State Revenue would have to return the Acknowledgement of Trust to Mary and Bob without assessing duty. This is because the condition precedent to the formation of the deed (i.e. that it was assessed at nominal duty) was not met, and therefore the deed was never properly in effect. At this point, Mary and Bob would be unable to rely on the Acknowledgement of Trust and would need to discuss their options with their Lawyer and Accountant (which could include lodging an objection). Mary and Bob are relieved that the Office of State Revenue did not assess the Acknowledgement of Trust with duty on the property's full value.
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Firstly, you should seek guidance from your state's revenue office regarding evidentiary requirements for your situation prior to signing the Acknowledgement of Trust.
For all assets, the Acknowledgement of Trust must be lodged at the relevant state's Office of State Revenue and duties (if any) paid on it. If you are claiming a reduction of normal duties, then you also need to lodge supporting documentation by statutory declaration and a letter stating the basis on which you are claiming a reduction of duties.
Where the Trust asset is real property, there is an additional requirement that the Acknowledgement of Trust is lodged at your state's Land Titles Office, along with any supporting documentation and lodgement fees.
You must be particularly careful if you are using this document for the purposes of SMSF assets. The ATO notes that the registration of a caveat with a declaration of trust on title is sufficient to demonstrate the ownership of real property assets of the SMSF and will satisfy the standard of subregulation 4.09A of the Superannuation Industry (Supervision) Regulations 1994.
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Registration requirements are different depending on which state the trust asset is located in. Registration must occur in the state that the asset is located in, rather than the state that the Trustee resides in.
When you purchase this document, you will also receive an information kit which gives you detailed information about each state's registration requirements.
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This document has been prepared by the law practice Law Central Legal
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