I'm looking for recommendations for which bank to open up a trust account for my discretionary trust. I am a contractor and will be operating my business through the trust.
I have transaction accounts with pretty much all major banks and my home loan is with CBA. Should I just stick with CBA for convenience or is there a bank that offers better features when it comes to trust accounts? Or does it not matter?
Any advice is appreciated.
I never trust banks…
Cash is king
contractor and will be operating my business through the trust.
What is the reason doing that way?
The purpose behind it will likely be an attempt to shift what may be considered Personal Services Income into Trust Income, which will then be distributed to other family members on a lower tax bracket.
Do the PSI test on the ATO website. If you can get away with it then good.
I would structure it so you meet all the tests so you got a story. Don't take your accountant's word for it because the paperwork you sign basically says it all falls back onto you. I've never seen an accountant being sued through normal course of work and their professional indemnity paying out. Yes they have been banned for doing illegal things like lodging fake tax returns etc to get refund money but never for selling a family trust that was ineffective / not needed.
Otherwise just getting creamed on fees until the ATO comes after you then you get creamed for another set of fees.
wow there are lots of holes in this system no wonder some are super rich by paying so little tax.
i saw news about someone run a childcare shop without real children and get million $ support from government
That childcare story sounds more like fraud than navigating loopholes… I hope so at least.
Not that simple unfortunately. PSI rules generally still apply even if your income goes through a trust unless you can prove otherwise to the ATO.
The trust is mainly for asset protection as I am in a field prone to litigation.
Operating through a trust with a corporate trustee provides asset protection.
The trust structure (vs a company alone) does allow for tax preferred distribution of income, but that assumes there are suitable beneficiaries of the trust to which the income can be given.
suitable beneficiaries of the trust
ah so I can nominate someone without job as beneficiary (therefore pay little or no tax) but actually I have full control to that person finance at the background - at the end I pay less tax than i should have paid
sure, if that beneficiary is over 18.
If invest in the name of your spouse without a job, you are doing the same thing.
However remember this is a business not employment. Due to PSI you cant just have a job and stream income through a trust. You need to have a business and when you have a business you can have multiple owners without needing a trust (ie shareholders). If I am a shareholder in a business and dont have a job, does the business 'pay less tax than it should have paid'?
A Swiss bank
Reserve bank of Australia
or Reserve bank of Nigeria
Pretty much all banks will open an account for a trust. The main issues you have is that if the trustee is a company, you end up having to open a company/business account rather than a personal account, and most business accounts have lower interest rates than personal accounts. That doesnt really matter if you distribute the trust income more or less immediately but its an issue if you retain income for longer periods and then distribute at the end of the FY
Macquarie is a good option either way.
Thanks for your input. I am the sole beneficiary so the income will be going straight into my offset account.
I will look into Macquarie.
You will need a certified copy of your trust deed (certified within the last 12 months) plus the usual info re the company for 'know your clients' requirements
On a practical level, decide on your software package ie xero, myob etc and see if your l the back you want will do data feeds..
Your accountant will thank you later
Skepticism
Macquarie Bank Cash Management + Accelerator account offers a decent interest rate for trust accounts