Trusts are a common structure used to operate a business, own assets and distribute income. Trust are very different structures to companies and partnerships and are therefore regulated differently. In this blog post we examine how Australian company numbers (ACN)s, Australian business numbers (ABN)s and tax file numbers (TFNs) relate to a trust.

Does a Trust have an Australian Company Number (ACN)?

An ACN is a unique nine-digit number that identifies an Australian company. A company’s ACN is generally used alongside a company’s name in any legal documents in order to clearly identify the company.  As an example, the documents could state ‘ABC Company Pty Ltd ACN 987 654 321’.

An ACN is allocated to your company when it is incorporated with the Australian Securities & Investments Commission (ASIC).

Trusts are an entirely different type of business structure to a company and therefore cannot have an ACN. However, an ACN may still be relevant to a trust if it has a corporate trustee. A corporate trustee is where you incorporate a company to act as the trustee of your trust, instead of an individual person.

Example:

Peter Jackson plans to purchase a number of investment properties. His accountant advises him to set up a discretionary trust to purchase the properties, so he can distribute the rental income to different family members. His accountant also recommends having a corporate trustee.

Peter’s accountant incorporates Jackson Investments Pty Ltd with ASIC. ASIC automatically assigns the company an ACN of 123 456 789. Peter’s accountant then sets up The Jackson Family Trust for him and appoints Jackson Investments Pty Ltd as the trustee. When signing the contracts to purchase the properties, the purchaser will be identified as follows:

‘Jackson Investments Pty Ltd ACN 123 456 789 ATF The Jackson Family Trust’

Does a Trust have an Australian Business Number (ABN)?

Your trust only needs an ABN if you are using it to operate a business, in the same way that a company only requires an ABN for the same purpose. However, rather than the trust itself having the ABN, the ABN is actually attached to the trustee of the trust in their capacity as trustee.

Example: 

Jack Peterson operates a clothing business in Noosa called Sunnythreads a sole trader, with a registered ABN of 98 765 432 100. Separate from his clothing business, Jack decides to start a landscaping business called Sunnyscapes, which after consulting his accountant he plans to operate through a trust. Jack gets his lawyers to set up a trust called The Peterson Family Trust and appoints himself as trustee for the trust. Because the trust will be operating a business, it will require an ABN. However, it is not the trust itself that has the ABN but the trustee, which in this case is Jack. Jack does not use his existing ABN from his clothing business, as this is for him personally. Instead, he registers a new ABN of 12 345 678 910 for himself as trustee for the trust.

Whenever Jack signs any legal documents for the landscaping business, the business will be identified as follows:

‘Jack Peterson ATF The Peterson Family Trust t/as Sunnyscapes ABN 12 345 678 910’

Whenever Jack signs any legal documents for his Clothing business, the business will be identified as follows

‘Jack Peterson t/as Sunnythreads ABN 98 765 432 100’

Does a Trust have a Tax File Number (TFN)?

A trust should have its own TFN, which like an ABN is registered by the trustee of the trust in their capacity as trustee. If an individual is a trustee of a trust, they do not use their own personal TFN as trustee. Instead, they use the separate TFN that was registered for them as trustee for the trust. If the trustee changes to another person in the future, that person would continue to use the same TFN for the trust.

If you have a corporate trustee for a trust, that company should register a TFN for the trust in its capacity as trustee. The company then uses that TFN when submitting any tax returns for the trust or having any other tax dealings on behalf of the trust. Again, if the trustee changes to another company in the future, that new company will continue using the same TFN for the trust.’

Example:

Gertrude Wilcox is employed as a nurse and receives pay slips from her employer that cite her own personal TFN. Together with her husband Howard, Gertrude decides to set up a family trust with which to own their share portfolio and distribute dividend income between them and their two children. Gertrude is appointed as trustee of the trust.

Gertrude registers a new TFN in her capacity as trustee for The Wilcox Family Trust, and cites this TFN when lodging income tax returns for the trust.

12 years later, Gertrude and Howard decide to appoint one of their children, Thomas, to replace Sarah as trustee for the trust. Thomas continues to use the same TFN that Sarah registered for the trust when lodging income tax returns for the trust.

Key Highlights

Trusts can be used to run a business, own assets and distribute income. A trust does not have an ACN. If it has a corporate trustee, however, the corporate trustee will have its own ACN. A trust only needs an ABN if it is conducting business. If it does, then the trustee registers an ABN in their capacity as trustee. A trust should have its own TFN. The trustee registers the TFN in their capacity as trustee. If you have questions about trusts, contact Michael Hamilton at Blue Dragon Business Services.

Blue Dragon Business Services are tax agents located in Cooroy, in the heart of Noosa Hinterland. We service all areas of the Sunshine Coast and South-East Queensland including Brisbane, Gympie, Ipswich and Logan  for tax, BAS and bookkeeping. We also practice as virtual CFOs, take on interim CFO engagements as well as financial management, reengineering and restructures including business turnarounds, transformations and expert financial modelling.

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E: michael@bluedragongroup.com.au

P: 07 5412 7111