Trading using my corporate trustee

Discussion in 'Accounting & Tax' started by scientist, 27th Feb, 2020.

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  1. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Advice should be re-checked prior to any change too. Its common to find someone using a trust to trade or invest and then then combine things. Often a real bad idea. When I say any change i mean anything at all. Changes to the trading or new activities etc.

    And I have seen people combine trading and property ownership. Thats almost certainly a concern.

    Even if a trust makes sense it may be prudent to consider two trusts with the same corporate trustee.
     
    Paul@PAS, 28th Feb, 2020
    #21
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  2. Mike A

    Mike A Well-Known Member

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    That comes with a host of issues itself. Was the trustee acting for xyz trust or abc trust. I would avoid that as well.
     
    Mike A, 28th Feb, 2020
    #22
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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    In many cases yes. In some its very evident which trust has paid for and held an investment. In a group situation yes a obvious issue. eg When a trading trust leases property from a property trust its a evident fail for the same trustee of course or where they may be loans

    One of the worst I have ever seen and it really did my head in is a group of three companies and they all changed names and 2 companies changed name to names formerly used by two of those 3 companies. We advised against it and they insisted. Every company was known by its current and former name. And some owned shares in their subs which also changed names.
     
    Paul@PAS, 28th Feb, 2020
    #23
  4. qak

    qak Well-Known Member

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    This is what they came up with, the link I posted before: Select your registrations - Business Registration Service

    No idea what they use as a Constitution, is Table A still a thing?
     
    qak, 28th Feb, 2020
    #24
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Replaceable rules if no Constitution
     
    Terry_w, 28th Feb, 2020
    #25
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Most people wouldnt know what the replaceable rules are. And there may be many really sound reasons NOT to use them. eg How will votes be counted ? What about different class rights for shareholders ? Even opening a bank account without a constitution is more difficult.

    Another simple example is a contract. Signed contrary to s127. Good advice would have explained how to avert this issue.

    And I have seen peeps setup a smsf trustee company using that aweful Govt link. That can really add to costs. A special purpose smsf trustee company MUST have a specially drafted constitution.
     
    Paul@PAS, 2nd Mar, 2020
    #26
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