Join our investing community

withdrawals from bank account of discretionary trust

Discussion in 'Accounting, Tax & Legal' started by try anything once, 2nd Mar, 2009.

  1. try anything once

    try anything once Well-Known Member

    Joined:
    8th Oct, 2008
    Posts:
    117
    Location:
    melb
    I have been issued an ATM card with the discretionary trust bank account we established a while back. Can anyone tell me whether there are any issues from tax accounting perspective with just withdrawing money - will my accountant need to maintain book entries for each transaction (ie date, amount, drawn from principle or interest etc) or is it a relatively simple matter to do one set of book entries come tax time? Possible we may end up with 50-100 transactions/month...
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    I don't see any reason you can't use the ATM card directly, but accounting for it may become a nightmare.

    For transparancy and ease of accounting I think it would be better to not use that ATM card, but rather transfer money (larger amounts less frequently) to your personal bank account before you withdraw it and spend it.

    This makes it far easier to track where the funds went to and what their purpose was.

    Why not use a personal credit/charge card for everything you need and then transfer funds across from the trust once a month to pay off the balance ?
     
  3. try anything once

    try anything once Well-Known Member

    Joined:
    8th Oct, 2008
    Posts:
    117
    Location:
    melb
    Sim
    thanks for your ideas. It just happens my trust account has lowest ATM fees but this may be a false economy if accounting fees go thru the roof.