Sole Trader to Individual Trustee (Discretionary Trust)

Sole trader currently operates a business using a single bank account.

If moving the business to a discretionary trust with an individual trustee (same person as the sole trader), could the trustee legally continue operating with the same bank account?

Can new contracts and invoices for the new business entity (ABN) be in the same individual name with no reference to being a trustee for the trust? Obviously the ABN will change.

 

No cannot use same bank account (not trust property) and the legal name will change. Can the business even operate in a trust ? (Personal Services Income ?) and might Part IVA apply ??

I would start with tax advice

 

Yes they could, but probably should tell the bank.

No legal need to declare the trust to anyone.

 

I'm not sure about the legal name changing. That's what I'm curious about.

PSI considerations would apply under either structure though right?

 

The legal entity is the person so no change there if they are the trustee.

 

What's the rationale for telling the bank?

 

probably contractual plus for asset protection. On bankruptcy or death how would they know that is the trust's account.

 

Do you mean 'Can' or 'might be no benefits in' ? Ie if PSI applied.

Good points. Thanks.

 

A trust does not own anything. It just holds assets.

The funds can be held in trust for a trustee or a beneficiary in any bank account. Or under a mattress.
A person or company can hold funds for a trustee also.

Though you may be called to account for the funds.

 

I question if the trust produces a tax benefit if the income is PSI. It would be a futile exercise since all the trust income would be attributed to the individual and (extra) deductions for the entity costs would be increased. And that is without considering why the income has switched from the individual to a trust. Part IVA allows the Commissioner to cancel any tax benefit.

 

The question is "why?". What are you trying to achieve?

YOU trading as YOU with assets owned by YOU, held in trust by YOU, for YOU as beneficiary pretty much equals no "trust" arrangement.
And a lot of expenses.

 

Agree with that. Thanks.

 

Personally, knowledge.

Yes, what you've described seems pointless.

 

Huh?