Corporate Trust to Hold Funds from Disposal Crypto

hi there,

My accountant suggested that I can minimise tax by putting my crypto under a company / trust and when i need to withdrawal money it should be sent to a business bank account. The idea is that i want to declare my income properly while legally minimising tax, and if there was a way to do this i think it'll be positive for the ATO and crypto world in general.

Point A: Ideally i'd like to work with a bank that is clear about this being OK, or even have a public statement or some material to support the fact that I won't end up in legal/financial issues by doing what i'm doing. i.e. the bank should understand just because it's crypto doesn't necessarily mean it's related to money laundering or black market.

I've spoken to some banks and it seems that any mention of crypto is like taboo as it causes them to take on the default stance of not willing/able to provide any further advice.

So these are the enquiries i've made around opening a Business Account while being honest about why i'm doing it:

  • CBA / Westpac - part of the big four, sort of knew that they'd take the hardest stance on this. Despite only AUD entering the bank account, only AUD leaving the bank account, i was told that if they even suspect anything originated from cryptocurrency i'd be in trouble which of course would in turn risk my mortgage and being marked by ATO and other banks.

  • Citibank - i only spoke to a indirect friend of a friend, who simply stated citibanks position would be the same as the markets position to minimise their risk - which to me is just a generic way of saying 'this belongs in the too hard basket'. From older online articles i had the impression citibank would be one of the more lenient banks out there, but i'd still need them to meet Point A above

  • ING Direct - they of course require that you have a separate bank account, to move AUD in and out, since they don't have a branch. Apparently they only accept money that originate from another bank (as opposed to an online wallet or exchange). In addition, the guy on the phone generically said their position on crypto would be similar to banks, at least that's the impression I got. So its almost pointless opening an account, if i need to pass money through another bank account before it lands on my ING account.

  • HSBC - is apparently part of collaborators the eTradeConnect Platform group, so i thought they'd be open minded. However they do not offer a Business Account. They only offer Personal, or Corporate Account (min. USD$50M turnover)

I'm thinking of going through the other banks that are collaborating with the eTradeConnect project that have an Australian presence:
*ANZ
*Bank of China
*Agricultural Bank of China Limited,
*Bank of Communications Co Ltd,
*BNP Paribas,
*Industrial and Commercial Bank of China

Have you had any success or anecdotes to share?
Perhaps I need to frame my enquiry differently before i start talking to another bank again? Seems very discouraging for someone who's trying to do this in a legit way?

Comments

  • +1

    From my (hazey) memory of company trust structure a single trust set up will get taxed in realized capital gains (ie you sell crypto at a profit) at 48.5% if you don't distribute the gains to the trust beneficieries. if you distribute the gains within any tax year they will just be taxed at the individuals rate which may or may not be beneficial depending on all of your other income ect. There used to be some capital gains discount but honestly this may have changed in the 10 years since i was at uni.

    If you are trying to use company+trust structure then you may be able to get that tax down to 27.5% however getting caught using the trust to gain the benefits of a capital gain discount and a company to gain the benfits of a lower tax rate is an ever changing and legally very borderline…..lets call it a grey zone.

    Assuming your accountant knows all of the above I would personally still consult a lawyer to check the exact plan you make with your accountant is 100% above board before proceeding.

    Regarding your actual question, set up a company, declare it as an active investment vehicle and move money in and out of it as you please. If you aren't doing anything illegal nobody cares at the bank.

    • Thanks for the info.
      And yes I'd agree this should be the case - "If you aren't doing anything illegal nobody cares at the bank." - but my concern is that if a bank has an agressive anti-crypto stance i'm at the mercy of the banks whim. They may see my account receiving money from, say, coinjar/btc markets depending on the climate that might be a reason to launch an investigation and risk my 'profile' for lack of a better term. Having mortgage, family with kids makes me risk-averse, even if i have nothing to hide I still want to avoid potentially a lot of wasted time responding to account freeze/investigation i'd rather avoid it if possible.

  • Could you give some more background on your accountant's advice? For example, you said company/trust. These are very different entities.
    To me, it doesnt make sense at all what you're being advised on.

    I'm not a tax accountant but there's a whole page on crpyto. It seems that spending the crypto as a "personal use asset" as a way of slowly exiting, doesnt carry any capital gains tax implications. For example, using Living Room of Satoshi (or any similar site) to pay your credit card every month.

    • I have a Corporate Trust and Company ACN/ABN that would be tied together

  • +1

    Why do you need to mention crypto-currency to the bank? Just sell crypto at an Australian exchange and have them send the AUD via an EFT to your business bank account.
    Like what Seba10 said

    Regarding your actual question, set up a company, declare it as an active investment vehicle and move money in and out of it as you please. If you aren't doing anything illegal nobody cares at the bank.

    Also, this will all cost money annually, are you sure your crypto will be worth more to offset the costs?

    • +1

      I'd rather confront the possibility head on and avoid surprises. I do have a relatively significant amount, not huge, but enough to start thinking about doing this above board.

      What I wrote in reply to an earlier comment:
      "And yes I'd agree this should be the case - "If you aren't doing anything illegal nobody cares at the bank." - but my concern is that if a bank has an agressive anti-crypto stance i'm at the mercy of the banks whim. They may see my account receiving money from, say, coinjar/btc markets depending on the climate that might be a reason to launch an investigation and risk my 'profile' for lack of a better term. Having mortgage, family with kids makes me risk-averse, even if i have nothing to hide I still want to avoid potentially a lot of wasted time responding to account freeze/investigation i'd rather avoid it if possible."

      • It's a good point.
        If you allow PM's i'll send you some anecdotes that might help.

  • From your questions, it is clear you will need pro advice. Like a doctor, consider a second opinion from another accountant if you are uncertain.
    My question would be how do you anticipate getting the money? A trust is only useful to direct income to somebody with a lower tax rate. Since any crypto gains will be capital, you will already only pay half your marginal rate - hard to see where you could make tax savings unless you have several adult family members earning zero income.

    Your banking questions aren’t the issue you need to be considering.

    • Thanks I'll weigh up the options with my accountant. My wife earns little, and my kids can benefit i suppose in 15-20 years time…

  • Everyone has a good point, but also, depending on how often you're trading, you may see the ATO classify you as in the business of trading currency, hence no capital gains discount will apply and the trusts income will basically be the selling price less cost price of the currency (simple explanation without going into other costs incurred).

    You will also need to factor how much profit will you be making. Most simple trust structures will be around $1500-$2000+gst each year for accountancy fees, but obviously depends on what your accountant quoted

    • thanks kasumi, so you're saying trading activity can mark me as a professional trader even though it's was originally under my personal name, and trading as business will mean i'll get less tax benefits?

      • This link may cover if you are qualified as a trader or investor.

  • just setup a transferwise account.

    • interesting to see transferwise treats BTC as an exchangeable currency, but what's the benefit?

  • Unless you have at least $50k in crypto, I can't see why you're bothering doing what you're doing. The costs and time involved outweigh any perceived benefits otherwise.

  • Are you basically hoping to use the business account as a vehicle to establish legitimacy for your crypto transactions in the eyes of the bank (i.e. to avoid seizure)?

    • well that's true. But even if I'm keeping it as Personal activities i'm declaring it to my accountant for tax purposes. I'm trying to take the next step which is minimise tax and still keep it above board