Who can be a trustee?

[ggumpshots]

__________________________________________

Can a non resident person be a trustee of an Australian Family Discretionary Trust?

Thus, what are the implications of that trustee distributing funds to another approved
1 non resident ,..............
2 resident.................

3 Would the answer be any different if the trust were a hybrid trust?.........

 

[dwyerfam]

Can a non resident person be a trustee of an Australian Family Discretionary Trust?

Thus, what are the implications of that trustee distributing funds to another approved
1 non resident ,..............
2 resident.................

3 Would the answer be any different if the trust were a hybrid trust?.........

ggumpshots,http://law.ato.gov.au/atolaw/view.htm?find="section 95"&docid=AID/AID2003231/00001

This might partly answer your question(s).

 

[Patosan]

G'day Ggumpshots,

As Dwyerfam's link is very handy.

However if you're using a Co trustee then at least one of the directors must be a resident ... though not sure if that's needed to satisfy trust rules or only those of having an Oz Co. You can get around this though if your intention is to return to Oz in the near future, you need to supply an Oz address, etc. that's what I've done.

On a different line of thinking if a person was non-resident and had no intention of living in Oz then usiing an offshore trust may be better, in some caes the rules are far less complex and they give better protection than in Oz. Each country has their own pecularities.
e.g. In the U.K. using a trust will not shield you death duty tax.
Thus many U.K. residents set up trusts in Oz, loading their assets into them.
In a few ways the Oz tax system is ok.

Now to distribution of trust income or capital.
It can go to absolutely anyone that the trust deed permits.
It matters not their residency or nationality.
The recipients are responsible for the payment of tax of these.

Bye

 

[ggumpshots]

Patosan
The link is very interesting but it refers only to capital gains events

Lets assume there was no capital gain event.
The trustee is not a company but the trust is resident in Australia and all assets, shares ,are in Australia.

My point is if the trustee distibutes to others and he is a non resident what are the consequeces. Would The receiptents not be responsible to pay if there was no authority in the first place to distribute funds.
I wonder if the distribution would be deemed void and then the tax would be imposed in the trust at a latter date ?

 

[rodimus]

If distributed to residents in other country, it depends on the tax law in their country whether income from overseas are taxed.

SOme countries have a double tax treaty with Australia, and people there do not need to pay tax when you distribute income to them from your Oz Trust.
Perhaps just a 10% witholding tax?
Is that good?

Say if you distribute to someone here(who already has an income), they have to pay 30% or more tax on it. But if someone overseas, u pay 10% and they dont have to pay anymore tax (in a country as mentioned above).

 

[Patosan]

It's getting very specific.
The trust deed is a legal doc and like all things legal a break in the law the break has to be recognised firstly. i.e. it would be up to the beneficiaries and/or appointor or someone else who had knowledge of the trustee going against the deed. I'm guessing that if things go un-noticed the trustee could do all sorts of nasty things. Such has been the topic of various movies and soap operas.

Back to one of your points ... as long as the trustee is correctly registered as such it does not matter whether they are non-resident or not ... I believe. So the question is not can they make distributions if they are non-resident ... rather can they legally be the trustee. If they can be trustee then they are in control of the trust, distributions and all.

Like wise it doesn't matter who or where the recipients are, they could be Japanese living in Finland. Perhaps they'd need to pay Oz withholding tax initially, as Rodimus stated. Perhaps the trustee is expected to pay the witholding tax upfront. For the exact tax law and mechanics of how it's paid I hope a more knowledgeable persons jumps in here to assist as I'm at my trust knowledge limit.

 

[ggumpshots]

Some excellent points guys which I hadnt focused on.
The word appointor has come up at different times but I cant locate this in my trust document.
Is that the same as the trustee.

 

[rodimus]

Hi,
Appointor means the person with the right/power to sack or appoint a trustee. If its your trust, usually its you as appointor.