Offset accounts for Trusts and Companies...

[Rangi]

Hi All,

Just a quick question for the MB's and the experienced.

Is it possible for mortgage offset accounts to be established against borrowings in a Co.ATF Trust accounts?

If so, which bank allows it as I am of the belief that the ATO have specific rules regarding this.

Cheers

 

[HLE]

Most certainly this is possible. I know of at least three lenders that can do this without any problems, with a little research I am sure there are plenty more.

There are a lot of issues regarding offset accounts in a company / trust with company trustee simply because lenders systems & professional packages are well set up to handle loans in a company name however offset accounts / cheque accounts are sometimes not allowed. This is nothing more than an IT problem. Lenders that do a lot of trust loans usually have systems that can allow this.

A few things you may want to be careful of for trust loans:

• Some lenders require all beneficiaries listed in the trust deed to be guarantors. This can be a nightmare!
• Many lender's pro pack benefits such as free credit cards and cheque accounts do not work with trusts because the accounts must be in a personal name.
• Most lenders do not accept Hybrid trusts.
• Low doc loans for trusts are becoming increasingly rare. Still a few lenders do offer them.
• Make sure your accountant and mortgage broker talk to each other so that nothing is stuffed up!

 

[Rob G.]

Hi All,

Just a quick question for the MB's and the experienced.

Is it possible for mortgage offset accounts to be established against borrowings in a Co.ATF Trust accounts?

If so, which bank allows it as I am of the belief that the ATO have specific rules regarding this.

Cheers

Do you mean trust money offset against trust IP mortgage ?

Cheers,

Rob

 

[HLE]

Hi Rob,

Yes that means an offset account in the name of the trust. Has someone told you there is a tax implication for this? If so, I am not aware of it.

 

[Rob G.]

Hi Rob,

Yes that means an offset account in the name of the trust. Has someone told you there is a tax implication for this? If so, I am not aware of it.

I was just trying to clarify Rangi's exact intention.

This is because storing trust money in a personal offset account would likely be a breach of fiduciary duty.

The "trustee" would be liable to hand over any gains, and compensate for any losses suffered - including opportunity cost.

Also, if the financial institution knew money was held on trust it might also be joined in any action for recovery.

In any event, the actions of the trustee would expose the trust to the ATO as a sham where the trustee acts as if it does not exist and any beneficiaries do not enforce the remedies.

Anyway, I was just asking the obvious because I have come across such things before.

Banks are usually careful about handling anything known to be trust accounts because this goes beyond mere debtor/creditor arrangements.

Cheers,

Rob

 

[Kristine..]

Wow, Rob!

I like your work!

cheers
Kristine

 

[Rangi]

I am just trying to organise the integrity of my accounts. The borrowing and offset accounts will be exactly the same. I just wanted to know of a bank which would offer this product...

There wouldn't be any 'personal' gain from this arrangement

 

[Rolf Latham]

HI Rangi

To answer your question, some of the mainstreams that will do offsets in co and trust names in recent times

Homeside
NAB
St George
Suncorp
AMP

Be aware that if you have a HDT Homeside wont facilitate the loan to start with, but if you have a HDT with personal trustee and you use the "right" structure,WBC will let you use the thire Rocket Repay Classic PlusCombo.

St George can be quirky unless the loan is "investment" and not secured to a PPOR

ta
rolf