A corporate trust is a legal arrangement where a trustee (the company) manages assets of the company for beneficiaries. Directors of the company are members of the trust and each new director of the company becomes a member of the trust. Trusts provide many benefits to your company such as protecting assets from creditors, as an owner of the company you can control how the trust is run and how assets are distributed. However, it can be difficult to figure out which documentation is needed and how it will be used. Read our guide below about registering your trust and whether you need an ACN.
What is an ACN?
An Australian Company Number (ACN) is a unique, a nine-digit number which helps to identify your company. Every company in Australia must have one, as it appears on all ‘public documents’ and ‘eligible negotiable instruments’. ASIC lists the following documents which must include your ACN:
- all documents lodged with ASIC
- statements of account, including invoices
- receipts (not machine-produced)
- orders for goods and services
- business letterheads
- official company notices
- cheques, promissory notes and bills of exchange, and
- written advertisements making a specific offer.
Along with this list, ASIC provides examples of documents where your ACN is not required. However, it is important to keep in mind that your Australian Company Number should always be clear and easy to identify which company it belongs to.
Does a Corporate Trust Need an ACN?
Following the point above, yes, your trust will need an ACN. It is an important part of establishing your trust, and a key part of the documentation that will need to be provided. However, if your business already has an Australian Business Number (ABN), you can use this instead. But, you must make sure that your ABN includes the ACN and is used on documents that require an ACN.
Registering a Trust
The first step to creating a trust is to register your company who will become the trustee. ASIC processes the registration and you will receive your ACN and Company Certificate, which takes 10-15 minutes. Once you receive this documentation, you are ready to establish your trust. Your ACN and company establish the corporate trustee of the trust.
Further, your trust will have its own Tax File Number (TFN), used to lodge tax returns by the trustee for the trust. However, the trust does not need to pay PAYG instalments. Later down the track, the beneficiaries of the trust will pay their part of the trusts instalment income. Additionally, the ATO will always require a tax return regardless of the net income, unless advised otherwise.
Conclusion
Establishing a corporate trust can provide great benefits for your business. However, it is important to consider possible disadvantages as well before deciding whether to establish a trust or not. Having your ACN on hand is an important part of registering for a corporate trust. However, if you need any further assistance, contact a business lawyer.
