Bank account for trust - Is it mandatory?

[ianvestor]

However he also reiterated firmly that a Trust must have a bank account where/when income is being generated, BY LAW.

Regards Jo

Thanks Jo. Just to clarify though, in my original post I stated that I am not using the trusts yet (i.e. they are not earning income). I guess I could close the bank accounts and open them again when I acquire more properties. I'm not going to bother now though since I plan to buy again next year at the latest. But it's good to know for next time so I don't open accounts earlier than I need to.

-Ian

 

[AVD]

The point is that it's not obligatory to have an account.
Of course it is very convenient for transactions, and those that profit from them would like you believe you cant do without it.

Pennyk, is that from experience? I'm gonna research that. Julia may know a bit more also.

Celeste, the trustee of the trust holds the $10 used to settle (start) the trust.
So whoever is the trustee need to hold the $10 at all times. In the trustee's purse, acct or wherever else.

The $10 can simply be stapled to the trust deed, the trustee does not need to hold onto it.

Alysha

 

[Piston Broke]

However he also reiterated firmly that a Trust must have a bank account where/when income is being generated, BY LAW.
Regards Jo

Really?
Please ask him which law or act (number & section) for the slow learners like me. I may have missed it.

For companies:
CORPORATIONS ACT 2001 under
PART 5.2--RECEIVERS, AND OTHER CONTROLLERS, OF PROPERTY OF CORPORATIONS-
SECT 421
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s421.html#receiver

Says that a "managing controller" (under sec427) must open a bank account, but nowhere else does it mention it.
Nowhere does the www.asic.gov.au say that a bank account is mandatory when starting a business. Again i could've missed that too.

Convenient they are, but compulsory....I'm still doing research (but not yet convinced).

 

[Rob G.]

Trust Law states that a Trustee must not mix Trust property with their own personal property.

As you know, most law is generated by the courts ... even Corporations Law.

Hence you will usually have to refer to cases since no section numbers exist for Judicial Law.

Cheers,

Rob

 

[ianvestor]

Trust Law states that a Trustee must not mix Trust property with their own personal property.

As you know, most law is generated by the courts ... even Corporations Law.

Hence you will usually have to refer to cases since no section numbers exist for Judicial Law.

Cheers,

Rob

If that's the case Rob, how can a trust that only owns $10 have a bank account that costs $10 / month? I had to put in some of my personal funds in there with it.

-Ian

P.S. It is against the law to willfully damage our national currency (i.e. staple holes )

 

[josko]

Thanks Jo. Just to clarify though, in my original post I stated that I am not using the trusts yet (i.e. they are not earning income). I guess I could close the bank accounts and open them again when I acquire more properties. I'm not going to bother now though since I plan to buy again next year at the latest. But it's good to know for next time so I don't open accounts earlier than I need to.

-Ian

Sorry Ian,

I got caught up in my own situation!

I think that you could close the accounts.

I also have a trust that we are not using and it does NOT need a bank account. It is inactive. I have also clarified this with my accountant.

Regards Jo

 

[Rob G.]

Exactly as MrY said, staple the $10 to the deed & file it.

If the Trust is inactive, it does not need a bank account.

If it active and receives income, it must go to a Trust Account - do not put it in the Trustees personal bank account.

Cheers,

Rob

 

[nonrecourse]

Exactly as MrY said, staple the $10 to the deed & file it.

If the Trust is inactive, it does not need a bank account.

If it active and receives income, it must go to a Trust Account - do not put it in the Trustees personal bank account.

Cheers,

Rob

The bank account is held by the Trustee acting for the Trust

 

[Piston Broke]

Doesnt surprise me that there is much confusion about these matters.
Accountant says "do this", Bank person "do that", lawyer says "do it like this", RE agent says "this is how everybody does it", and nobody really explains why, nor do most ask why.

So far I have not seen any law stating that a person, company must have a bank account.
I'm still searching though...

----

Originally Posted by Rob G. View Post
"Trust Law states that a Trustee must not mix Trust property with their own personal property.
As you know, most law is generated by the courts ... even Corporations Law."

Nope I certainly never new, or learned that the our laws are generated by the courts!
It has never before been the role of the judiciary to "generate" or make laws.

COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT - SECT 1
Legislative power

The legislative power of the Commonwealth shall be vested in a Federal Parliament, which shall consist of the Queen, a Senate, and a House of Representatives, and which is hereinafter called The Parliament , or The Parliament of the Commonwealth .

....yup, the Queen still tops the list of who makes the laws.

 

[Mamaof3]

Just going back to Steve's question, does anyone know whether it needs to be a 'business' account?

We've got a couple of ANZ accounts which were set up 5ish years ago and have a $0 balance in them now as they're not being used but we've not closed them because we got an exemption from fees a few years back.....so was just thinking....would it be ok to use one of these accounts purely as our "trust" account and for no other purpose? its obviously not a 'business' account but just an ordinary transaction account.

any thoughts would be great

 

[Rob G.]

Nope I certainly never new, or learned that the our laws are generated by the courts!
It has never before been the role of the judiciary to "generate" or make laws.

COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT - SECT 1
Legislative power

The legislative power of the Commonwealth shall be vested in a Federal Parliament, which shall consist of the Queen, a Senate, and a House of Representatives, and which is hereinafter called The Parliament , or The Parliament of the Commonwealth .

....yup, the Queen still tops the list of who makes the laws.

Ever heard of Case Law ?

Cheers,

Rob

 

[rodimus]

i think westpac charges only $6.50 p m.

Does anyone know any bank charging less than that?

I think the trust doesnt necessarily have to have a bank account, if there are not too many transactions.

 

[josko]

i think westpac charges only $6.50 p m.

Does anyone know any bank charging less than that?

I think the trust doesnt necessarily have to have a bank account, if there are not too many transactions.

Westpac charge $5.00/month, hpwever they take 48 hours to show balances and transfer money! Hopeless! I went for the cheapest, I thought, but lost on service!

I was told by Westpac that A Trust Account has to be opened as a Business Account.


Originally Posted by Rob G.

Exactly as MrY said, staple the $10 to the deed & file it.

If the Trust is inactive, it does not need a bank account.

If it active and receives income, it must go to a Trust Account - do not put it in the Trustees personal bank account.

Cheers,

Rob

Exactly. If you are audited by the ATO, they will also want to see a paper trail of monies going into/out the Trust, if the Trust is operating.

Regards Jo

 

[Celeste]

Hi all

I will give my opion on this from a senior bookkeepers ( 28yrs experience with some of that for a lawyer and an Accounting firm working in insolvancies and liquidations) point of view:

I would suggest a bank account not neccessary if the trust is inactive. Staple the $10 on the trust deed. Done. Until you start using it.

We have legislation in place for all things financial. BUT, this is all open to interpretation and it is the court/tribunials that determines the interpretation at the time. Hence we have what is commonly known as "Precedents", " case laws", "ATO Rulings" These are usually decided when some disputes a certain bodies interpretation ie: the ATO. You will find all sorts of Rulings on the ATO site in regards to the interpretation of the Income tax rules and regulations.

I would give the advice that any business income and all expense be seperated from private. I have cleaned up many a mess from business the intertwine the two. It is a nightmare... Then theres the problem of calculating any interest charges between private / investment...

Legally, you have to have any bank accounts opened in the name and I will stress the full legal name of the entity. My hubby got a letter re: his SMSF, as his cheque book was not named correctly. He could have been fined. This is the same for any legal doc. Like an Offer made by a Trust the Offer should read " Mrs xx (full name as per the trust) ATF the xxx trust."

As for pennyk's post, regardless of law etc. A bank connot deposit a cheques made out for " xxx trust" into jo blows bank account even if he is the Trustee.

Further to banks and cheques etc.

Example: you have a cheque made out to " xxx business"

- If the chq is not crossed printed or written " not negotiable" it can be signed over to another person and or business and it can be cashed over the counter.

- If it is crossed either printed or written " not negotiable " it has to be placed in a bank account, it usually cannot be cashed over the counter. You can have the writer of the chq write on it "open to cash" and the bank will cash it - especiall if it is wages, if you are the named person on the chq. They should ask for ID. They should not however cash one made out to a business. It has to be banked into an account in the name of the business.

I guess my lawn mower man got stuck with this at one stage he requested on his invoice that any cheques be made out in his name. This has stopped, so I guess he opened a business account...

I have come across some very slack tellers that will do what there not supposed to. I can tell you from experience that if you try to deposit a chq made out in another name into an account via the ATM it will be rejected.
I found this out when I tried to bank a cheque in my maiden name into our bank account in my married name. I had to go into the bank with my marriage certificate to bank it...

I hope this clarified the situation.........

 

[Celeste]

Sorry about the spelling...........

 

[josko]

Thanks Celeste, great post and and sound advice.

regards Jo