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Deregistration of Trustee for Family Trust

Discussion in 'Accounting, Tax & Legal' started by NicMc, 12th Jun, 2018.

  1. NicMc

    NicMc New Member

    Joined:
    12th Jun, 2018
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    Location:
    Brisbane
    Hi all

    About 10 years ago we set up a Family Trust with our Company as Trustee. As it transpired, the Family Trust was never used, and has never earned any income, held any assets nor carried any debt. Other than lodging NIL Business Activity Statements each quarter, we've given it little thought.

    In 2013 we closed and voluntarily deregistered our Company - neglecting to consider the ramifications with regard to the Family Trust.

    This was brought to my attention by a notice from the ATO advising that we had a couple of Tax Returns (for the Trust) overdue. So now we find ourselves with a Family Trust with a deregistered Company as Trustee.

    I'd be grateful for advice on what I should do going forward - i.e. on the Tax Returns I'm assuming that listing a (voluntarily) deregistered Company as Trustee is problematic.

    Is closing the Trust the best way to solve this problem?

    Any other advice or suggestions would be greatly appreciate. Thank you.
     
    twisted strategies likes this.
  2. Terryw

    Terryw Well-Known Member

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    9th Jun, 2006
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    Location:
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    Have a read of the trust deed and see what happens.
    I have written about this here
    Legal Tip 32: What happens to trust property if the trustee is deregistered? https://propertychat.com.au/community/threads/legal-tip-32-what-happens-to-trust-property-if-the-trustee-is-deregistered.1619/

    Under trust law the trust will suddenly be without a trustee which would cause the trust to fail. But there is legislation to prevent this as s 601AD(1A) of the Corporations Act provides that all the property will vest in the Commonwealth. The Commonwealth will become trustee.

    It may then be possible for the Appointor to appoint a new trustee or for an application for the courts to appoint a new trustee under the relevant Trustee Act.

    The new trustee could then do the nil tax returns.
     
    twisted strategies likes this.
  3. CC69

    CC69 New Member

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    19th Jun, 2019
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    Location:
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    Hello - I have a similar question.

    I had a family trust that had a corporate trustee - a company that I was Director of.

    I unfortunately hit a difficult time and was forced to go into bankruptcy and the company that was the corporate trustee was deregistered and I was declared bankrupt in 2015.

    The Family Trust hold no assets at all at the time I was declared bankrupt and I haven't lodged tax returns since 2015.

    How would I go about closing this Trust?

    The company I was a Director of has been deregistered and is listed as the Trustee, I am a bankrupt and I am listed on the Trust Deed as the "Appointer".

    Where do I start?
     
  4. Terryw

    Terryw Well-Known Member

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    where did its assets go?
     
  5. CC69

    CC69 New Member

    Joined:
    19th Jun, 2019
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    Location:
    Victoria

    The Trust only held cash - no property or plant and over the last few years of my business the cash was eroded away as I used it to keep my business afloat and in the final few years of my business there was no cash from my business to contribute. So the trust ended up empty and has no assets.
     
  6. Terryw

    Terryw Well-Known Member

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    Location:
    Sydney
    A trust is not an entity or a legal person, but just a relationship between a trustee and beneficiaries over property with obligations. Since there is no property there is no trust.
    So nothing else to do.

    You could appoint yourself as trustee and then cause the trust to vest, but no point really.

    You will probably need to notify the ATO that the trust has ceased to exist - as a trust is a taxpayer generally