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Bare Trust Deed

A deed that establishes a bare trust. In a bare trust, the only interest that the trustee has in the trust property is the bare legal title, and it is not required to perform further legal duties. Customisable and ready to use within 5 minutes.
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Document Overview

This precedent is a basic bare trust deed to be entered into by a trustee and a beneficiary.A bare trust is a type of trust in which the beneficiary has an absolute right to both income and capital and may call for both to be remitted into his or her own name. Any income received must be distributed within the tax period it is earned. The trustee of a bare trust has no active duties to perform.

Use this Bare Trust Deed if:

  • You are establishing a bare trust.

What does the Unit Certificate cover?

  • The rights and obligations of the trustee;

  • The rights and obligations of the beneficiary; and

  • The procedure for changing the trustee.

Further information

Considerations on stamp duty

As to stamp duty — generally see the introductory notes to precedent “Nominee trust deed in respect of shares” in respect of nominee trusts in respect of shares and precedent “Nominee trust deed in respect of land” in respect of nominee trusts in respect of land.

As to bare trusts and NSW landholder duty — see Landholder Duty: Bare Trusts Revenue Ruling No. DUT 41.

As to bare trusts and taxation there is currently much uncertainty — see for example Oswal v Commissioner of Taxation [2013] FCA 745 which involved the extent to which a beneficiary can be “absolutely entitled” to a CGT asset set aside on a separate trust for its sole benefit, where the trustee had a statutory right of sale and a right to be indemnified out of trust assets in respect of any liabilities properly incurred as trustee (which most trustees have). The court held that due to either of these factors, no beneficiary could be “absolutely entitled”. But on 14 February 2018 the Board of Taxation released a report into its review of the tax arrangements applying to bare trusts and similar arrangements. The key recommendation set out in the report is for the Parliament to legislate to “look through” or essentially ignore certain bare trusts and similar arrangements for income tax purposes which, if implemented, would bring much needed clarity to this area of the law.

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