Join our investing community

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
    Posts:
    1
    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

    Joined:
    9th Jun, 2006
    Posts:
    830
    Location:
    Sydney
    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.