Is it 100% necessary for the Corporate Trustee of a DT to have a bank account in its own name to receive rent and pay expenses or can that all happen through a personal bank account? For lots of reasons I prefer the later but my accountant is pushing me for the former. My records are thorough so I'd prefer it all combined as easier and cheaper - can I keep doing this if I document somehow that these payments in and out of personal account on behalf of the company are to be treated as zero percent loans?
Trustee bank account
- Thread starter Hakuna Matata
- Start date
A trustee has a general duty to keep trust property separate from its own. Trustee may be breaching duty.
Asset protection issues are various too. Argument may be that the trust doesn't exist, or is just trustee for you, or your alter ego. if you go bankrupt all trust cash would be seized by trustee in bankruptcy.
Not a good idea.
Asset protection issues are various too. Argument may be that the trust doesn't exist, or is just trustee for you, or your alter ego. if you go bankrupt all trust cash would be seized by trustee in bankruptcy.
Not a good idea.
I have had to assist clients who have been quizzed on that issue by the ATO / OSR etc... Its a dangerous way to operate a trust, a company or any other form of structure / entity etc. In some cases its fatal and the taxing authorities are happy to just consider that the trust was a sham and it never existed. How can the trust consider another beneficiary receives the income when its all in your bank account ?? How can you say its a trust asset when you paid proceeds from your account ?
Why go to cost and trouble to asset protect etc then be a tight **** for $10 a month and blow all of the benefits away ?
Why go to cost and trouble to asset protect etc then be a tight **** for $10 a month and blow all of the benefits away ?
What happens if the property is negative cashflow & the rental from the property doesn't cover the interest charged by the bank. The additional cash to pay bank interest would need to be covered by personal funds, so how would this be structured?
By the trusts own funds, or
someone gifting to the trust, or
someone loaning to the trust.
Trust law imposes a strict duty on the trustee to not comingle funds.
If your negatively geared property is the only 'income producing asset' held on that trust then tax losses will become trapped.
If it actually is cashflow negative then
1) gifting cash will not be deductible to the donor
2) commercial loans to the trust will just make assessable income for the lender and even more tax losses get trapped in the trust (this is like being assessed now so you can get a deduction later)
If your negatively geared property is the only 'income producing asset' held on that trust then tax losses will become trapped.
If it actually is cashflow negative then
1) gifting cash will not be deductible to the donor
2) commercial loans to the trust will just make assessable income for the lender and even more tax losses get trapped in the trust (this is like being assessed now so you can get a deduction later)
Don't cut corners to save a few hundred dollars. You'll regret it in 10 years and it'll cost you a lot more.
Thanks to everyone for great info. I'll go ahead with the business account to keep things separate.
