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Witholding Tax & Trust Structure

Discussion in 'General Investing Discussion' started by BigStrawbs, 18th Dec, 2009.

  1. BigStrawbs

    BigStrawbs Member

    Joined:
    16th Oct, 2009
    Posts:
    15
    Location:
    Adealide, SA
    Hi All,

    I operate a Trust with a corporate Trustee. I note from my BAS (I have only been in business in this structure for 2 quarters) that the corporate trustee is registered for Withholding Tax but the Trust is not. The corporate trustee is not an ongoing business (i.e. it is just the trustee) and therefore I would have thought my “salary” (I pay myself 80K + super as the Principal to stay in the 30c tax bracket) is coming via the Trust and therefore should be paying the withholding liability.

    Am I missing something here or do I need to get the Trust registered for withholding tax? Or is the Withholding Tax paid by the "Trustee" and not the "Trust"?

    Thanks,
    Brian.
     
    Last edited by a moderator: 18th Dec, 2009
  2. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    If you have correspondence from the ATO, either a letter a BAS - do a quick check of the ABN number on the letter via the ABR website here.

    Just remember that the ATO will send the trust correspondence in the name of "The Trustee for BigStrawbs Trust" - which doesn't mean it is for the actual trustee company (i.e. BigStrawbs Pty Ltd) - it is just the way they address it.

    If you check the ABN via the ABR website, it should confirm what the actual entity that is registered for PAYG Withholding (i.e. the entity type should say Trust of some type).

    If the ABN number search returns your trustee company, you will need cancel the PAYG Withholding registration with the company and re-register it all with the trust itself.

    You are correct - the trust pays the PAYGW as it is the trading entity for tax purposes.

    The way the ATO / ABR registers the names for trusts is a little confusing.

    Hope this helps
    SM
     
  3. BigStrawbs

    BigStrawbs Member

    Joined:
    16th Oct, 2009
    Posts:
    15
    Location:
    Adealide, SA
    Thanks Superman.

    I have confirmed the Company has been registered, not the Trust. I will fix this tomorrow.

    Makes me wounder why I paid my accountants all that money to set this up when they make mistakes like this.........

    Cheers,
    Brian.