Recommendations for trust bank account

Hello

Can anyone recommend a good bank account for a trust? It's for a corporate trustee and will be used solely for the trust's finances

Your definition of 'good' may vary, which is partly why I've posted this thread. I've been suggested Macquarie CMT, but I've read you need to park $5,000 there as a minimum balance and I'd rather leave $5,000 in my offset account

Is there some advantage to Macquarie CMT that I'm missing?

- MiddleClassMonkey

 

"your" offset account - do you mean "your" money or the money held by you on trust ?

Rob

 

Savings and Loans Credit Union for me, no fees unless I write cheques and conviniant online banking. Only downside is it's a trip to the city if I want to do any over the counter stuff which is rare now.

 

I just have a Westpac Classic Plus for my company trustee. Nothin' fancy.

 

Thanks for everyone's comments.

RobG, I meant my personal mortgage offset account. In short, I have a mortgage on my PPOR but would like to invest some capital I have. For debt re-cycling, I plan to place all capital into PPOR's offset then redraw as investment debt.

I'm now a bit confused, as I was planning to invest through a trust. If I redraw for investment purposes into shares/CFDs/MFs through my trust, how do I move my money from my personal name to trust's name? And who will benefit from tax deductability on the "new loan" - me? or trust? arrrgh!!

- MiddleClassMonkey

 

You need to have a split personality with trusts - even when you are a beneficiary (especially if you are not the sole beneficiary).

As a trustee you are the legal owner but not beneficial owner of the trust property.

You are not permitted to make a profit from your position of trust. Hence by including trust property (money) in a personal offset account you are personally benefitting from the 'free use' of the trust money - i.e. the interest reductions on your personal loan.

The ATO is keen on checking the technical details of trusts that may be used as tax planning vehicles.

Also, if you freely mingle your assets with trust assets then the latter may be deemed within the reach of creditors & litigants !!

Of course, you need to check this info with your Accountant as your specific situation may be different.

Cheers,

Rob

 

Thanks for your comments.

The capital I'm looking to invest is my personal capital, not owned by the trust. My aim is to invest in a mix of growth and income funds. My wife doesn't work and I'm on the top tax rate so to take advantage of our tax position we've got a (hybrid) trust.

Now I could simply transfer the capital to the trust's name and invest away, but shouldn't I debt recycle?

If yes, how do I debt recycle into my trust?

I could place the capital into my offset, then redraw and:

1) Invest in own name, and the loan would be tax deductible (but gains taxed at top tax rate)

2) Invest "through" trust and distribute gains to wife to avoid top tax rate. But by doing this I lose tax deductibility on the loan right?

Is there any way I can have the loan tax deductible AND investments made in trust's name?

- MiddleClassMonkey

 

I would not want to give general advice in case it is misconstrued as a recommendation !!!

Is income splitting the only objective - what about asset protection, estate planning, possibility of running a business through the trust etc ?

There is an infinite variety of structures, each with advantages & disadvantages for which you REALLY need to get advice.

As Sim mentioned, borrowing individually to put capital into a discretionary trust is not sufficient to make interest deductible to you. If you made a commercial loan to the trust from which you will derive interest income MAY make interest deductible.

Also, buying units in a trust MAY make interest deductible if it can be shown to derive your assessable income by the fixed distributions. Note also that this gives a cost base for CGT when the units are redeemed.

When you get to a HDT then the variations are enormous for borrowings and YOU NEED ADVICE.

You are the trustee and you are required to be aware of your fiduciary duties etc....

Sorry, but I don't work in this area ...

Cheers,

Rob

 

Thanks Rob, I'll go back to accountant. Just thought I'd give it a go here since a few posters promote debt recycling and use of trust structures (but perhaps not together?)

 

Hi MCM,

You might be able to use debt recycling and on-lend the 'recycled' debt to your trust? Like Rob said, speak to your accountant, it's very difficult to assess your situation without knowing the details, not that I would be willing to give advice anyway.

Mark

 

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