How to set up a Trust in Australia?

How to Set up a Trust in Australia?


If you are not an Australian resident, and are looking to invest into Australia, then one useful structure you might be interested in is setting up a trust. It is very commonly used for investment and business purposes. A trust allows setting up a company or a person (a trustee) to look after all the business assets for the beneficiaries.

Due to the intricate nature of a trustee and beneficiary relationship, setting up a trust can be a complex and costly process. There needs to be a detailed outline, known as trust deed, that clearly and accurately specifies how the trust needs to be run. This trust deed also outlines the trustee remuneration for all the administration work and trust management tasks they undertake. But on the hindsight, it must be kept in mind that it does help to protect the assets for the beneficiaries. Therefore, for inventors who are not residents of Australia, setting up a trust can be a very prudent financial decision for either themselves or their family or kin.

In a trust, the trustee is essentially responsible for everything relating to the trust. They run all the daily administrative tasks and also decide how the business profit should be distributed to the beneficiaries. They ensure the tax laws and regulations are maintained, the taxes are lodged accordingly and also ensure that the accurate tax returns and tax liabilities are sorted out with the Australian Tax office (ATO). Although, trust is a legal relationship and not an entity, the tax administrations consider it as a taxpayer entity.

How the trust or the beneficiaries get taxed depends on a couple of factors:

  • If all the income from the trust goes to the adult resident beneficiaries then no taxes are levied upon the trust, since the tax gets deducted from the beneficiary’s individual tax lodgement.
  • However, if any of the trust income is distributed to the beneficiaries who are non-residents or minors, in that case it’s the trustee who must pay the tax on the share of the income of that group of beneficiaries. When these beneficiaries are declaring their taxes they can make a claim for a credit on the amount already paid by the trustee.
  • Finally, if it has been decided that trust will retain all the trust income, instead of distributing it to the shareholders, in that case, the tax is levied on the whole retained income at the highest individual tax rate, and it’s the trustee that gets assessed.

It is important to know that there are different kinds of trusts. For the purpose of this blog, we’d only focus on the following types of trusts:

  • Unit Trust: A unit trust refers to those trust where a unit (i.e. a piece of property) is owned by an investor (referred to as unitholder), who receives a certain amount income and capital from that unit trust. The amount of income gets decided at the time of the issue of the unit, and the units can easily be bought and sold to other investors. However, a unit from a unit trust must not be mistaken with a share. In a unit trust, the unitholders are the legal owner of the unit and they are entitled to any of the future incomes and payments from that unit.
  • Managed Investment Trust (MIT): This trust is a type of management investment scheme that is publicly held and receives collective investments from the public. This is a very popular trust among the non-resident or foreign investors as they are subjected to a relatively lower rate of withholding tax on any amount received from MIT. The foreign investors can also use MIT as their investment vehicle for acquiring assets either directly or indirectly.
  • Family Trust: You may also opt for a family trust, which helps protect the asset, have tax benefits and also ensures that the assets are kept within the family. It gives a lot of flexibility in distributing the income to the family members. In addition to that in case anything goes wrong, this trust helps protect the assets from the creditors.

It must be understood that trusts are a great way to safeguard your assets and ensure a certain form of protection from any business risks. But a lot of care must be undertaken when creating the trust deed, since that plays a vital role on how the trust will be operated, including defining the roles and entitlement of every individual included in the trust. Once a trust has been established, it is very difficult to dissolve it and, and any alteration to the trust deed also has severe tax implications. Therefore, if you are interested in setting up a trust, it is recommended that you consult legal professionals to help you through the process.

To sum up, the all the different registrations you need to undertake to set up a trust are as follow:

Australian Business Number (ABN) No Cost Mandatory
Business Tax File Number No Cost Registered by the Trustee
Business Name $37+ Optional, you can use your own name
Pay As You Go (PAYG) Withholding No Cost Mandatory if employee is hired
Fringe Benefits Tax (FBT) No Cost Mandatory if Fringe Benefits are offered
Goods & Services Tax (GST) No Cost Mandatory if annual GST turnover is worth $75,000 or over

As a foreign investor another important thing to note is what kind of visas are applicable for you, so that you are able to legally set up a trust. For foreign investors, business visas are currently provided under the Business Innovation and Investment Program (BIIP). There are four classes of BIIP:

  • Business Innovation Visa (188A);
  • Business Investor visa (188B);
  • Significant Investor Visa (188C);
  • Entrepreneur Visa (188E).

In order to understand which 188 visa class is suitable for you, you can seek professional and reliable immigration legal advice. At Path Migration, we have a team of immigration lawyers who are specialists in this field, therefore, if you have any questions  please do not hesitate to  contact us or book a consultation.


For more information, please visit:


Share This Post

Comments are closed.