Join Australia's most dynamic and respected property investment community

Trusts and ACN/ABN (Development Project)

Discussion in 'Legal Issues' started by albanga, 8th Apr, 2016.

Tags:
  1. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,105
    Location:
    Melbourne
    Didn't think I would be using PC to ask an IT work question on trusts but here goes!

    We have developed a system for contractors to register to work for our company but to do so they need to have an ACN and be registered for GST.

    We use the business.gov site to perform the lookup which then pre-populates additional information available from that tool.

    Just recently we came across a contractor unable to continue because the business.gov website could not identify they had an ACN. I then looked this up on the ASIC website which found this ACN and noted it was a trust. That trust however was not linked to that same persons ABN.

    So to get around this we have updated our system so that the contractor can now enter an ACN and if the lookup finds nothing it will then allow them to enter an ABN. A search is then performed on this to check the entity type and if not under a trust they are unable to continue. If it notes the entity is a trust and registered for GST they can continue.

    This is working but I think this is a problem because from what I have researched, a trust doesn't need to have an ACN? If anything they probably wouldn't usually?

    We have two contractors who were unable to register due to this problem and both of them do have an ACN with their trust but maybe that was just a coincidence?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,937
    Location:
    Sydney
    ASIC website only shows company info, it doesn't show any trust relationships.
    The ABR website may show the company is acting as trustee if you search for its ABN or ACN.

    ACNs only relate to companies.
     
  3. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,105
    Location:
    Melbourne
    The ABR website is what we use to perform the lookup.
    If a company is linked to an ABN our site works fine. It's only when the lookup cannot find the ACN because it is in a trust. Not sure why the ASIC website can find it but the ABR site cannot?

    But to answer my question would someone working as a contractor who has a trust usually have an ACN? As I mentioned this has only come up a few times and in those instances that was the case.
    My issue is we allow someone to register using a trust entity with an ABN but then there trust does not have an ACN. Ofcourse a manual check has also been put in place but systems development is all about full automation.
     
  4. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,619
    Location:
    Sydney
    It is not possible for a trust to have an ACN. So your automation system cannot use ACN as a search parameter as any trusts and non corporate entities would be missed unless you will only accept registered companies as contractors. An ACN is an identification number for companies as used by ASIC. An ABN is issued by the ATO and is the same number as the ACN with a 2 digit prefix.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,937
    Location:
    Sydney
    A trust is a relationship. You would need to look for the trustee - which would be a person(s) or a comapny. a person would not have an ACN.
     
  6. JDM

    JDM Well-Known Member

    Joined:
    19th Jan, 2016
    Posts:
    145
    Location:
    London (ex Brisbane)
    A trust cannot have an ACN but it can have an ABN. A trustee can have both an ACN (if a company) and an ABN.

    So as an example

    Trustee Co - ACN 123 456 789 / ABN 00 123 456 789
    Trust - ABN 00 987 654 321

    If it is an individual trustee there will only be the ABN of the trust (individual might have their own ABN but that is not relevant).
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,358
    Location:
    Sydney
    A company and ABN do not mean a worker is a contractor. They may still be an employee under Commonwealth and State Law. The ATO and Fair Work Australia have recently undertaken a huge education campaign on this issue.

    Construction, IT, Trucking and other industries are in the spotlight. the key issue is that they must "run their own business". Sham contracting can be costly.

    When I was involved with a large civil contracting firm we only engaged legit contractors with Co + ABN and also who did not work solely and exclusively for us. Our work orders were all project by project and that assisted. They were required to demonstrate a valid workers comp policy + their own public liability insurance of $20m+. Without those being current we gave no work. We also ensured they contracted to be responsible for all damage / rectification and they had to supply all tools and transport. At best we would supply materials ie fibre optic cable. We would also do a ABN search and a company search to ensure the ACN wasnt "borrowed" from a mate or that of sole trader or partnership. We would NEVER engage sole traders or partnerships.
     
    Last edited: 11th Apr, 2016
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,358
    Location:
    Sydney
    A human trustee for a trust is a warning sign for any contractor engagement.
     
  9. JDM

    JDM Well-Known Member

    Joined:
    19th Jan, 2016
    Posts:
    145
    Location:
    London (ex Brisbane)
    A human trustee is a warning sign of a bad trust structure in most circumstances!
     
    Paul@PFI likes this.