Amateur question, but suppose a property investor sets up a trust, are the ongoing accounting fees for the trust deductible against the Trustee's income?
And assuming the trust, like all good trusts, has a corporate trustee - how about the annual ASIC registration for the trustee company? Is that deductible and if so, to whom? The trust, the beneficiaries?
It can't be deductible to the beneficiaries as it is not incurred by them. It is incurred by the trustee in relation to them acting as trustee and could be claimed by the trust it is relates to the production of assessable income.
Read my post above. These are filing fees. Others are accounting and tax services, software for accounting, bank charges. Entity costs may relate to the entity where some costs relate to the income production activity. A good distinction is why accounting fees are deductible. They dont produce income. But they do assist the entity to conduct its tax affairs arising from the activity of the trust which includes production of income. Can the trust incur costs for the trustee to travel by car and meet and run a office ? Not usually. How does the trust incur such costs ? It doesnt lease premises and doesnt own a car etc. Trust beneficiaries cannot claim any such costs as they have no expectation or fixed entitlement to trust income (a unit trust may be excepted eg a unitholder borrows to acquire units in the trust) . Hence they fail that important rule in s8-1 which relates income and costs being incurred to produce the income. eg Mary is trustee for a trust that conducts a busienss. She does work at home concerning the disc trust and wants the trust to claim a hourly rate for electricity. It cant and she cant. It didnt incur any cost and Mary has no expectation of income even if she did distribute $1 to herself (for certainty). I am often asked if a trust can claim a % of rent etc. Not unless it is a party to a lease and conducts its income producing activities based on the % of costs claimed.
