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Re: Small Absolutely Entitled Trust

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Devotee

Views 1747

Replies 7

One of the problems for small direct investors can be transaction costs.

Proposal:

A trust on these terms:

1.The name of this trust is Jones Share Trust

2.The beneficiaries of this trust are:
Jim Jones
Jan Jones
Tom Jones

3.The purpose of this trust is to buy, hold, and sell shares in securities on behalf of the beneficiaries

4.For the purpose of this trust “securities” are defined as listed tradable securities on stock markets and similar rights associated with crowd funding regimes. Herein such securities are referred to as “shares”.

5.Beneficial ownership of particular bundles of shares will be in proportion to the funds provided by beneficiaries in the purchase of that bundle of shares.

6.Where more than one bundle of the same security is purchased on different days the bundle will be treated as a separate bundle.

7.Beneficiaries can appoint or replace trustee by simple majority vote.

8.Costs of managing trust in any year will be born by each beneficiary in proportion to their net income gain in a year.

9.All meeting resolutions, beneficiary instructions, trades, % holdings of bundles of shares by particular beneficiaries, and dividends, will be documented.

(Death, incapacity, can’t (wont) make meeting, etc etc).

QUESTION:
If the above was instituted by documenting, settling $10, stamping (if required), holding beneficiary meeting and appointing trustee, taking instructions and funds from beneficiaries, and then commencing buying owning selling, all documented and evidenced, could the beneficiaries add the dividends and distributions, franking credits, capital gains, and capital losses to their tax returns as though they owned the shares directly? And could the trust not lodge a tax return?

 

EDIT:

 

Refined Terms:

 

Intent: The intent of this trust is to minimise the transaction costs of buying selling and holding shares for a small number of personally intimate investors so that diversification and liquidity of those shares can be more economically equivalent to larger investors.

 

Each beneficiary shall have an absolute, indefeasible entitlement to a known portion of the capital and the income of the trust. All capital and income of the trust shall be vested absolutely in one beneficiary exclusively.

 

For the purpose of delineating a parcel of shares, multiple units of the same share purchased on any day defined as midnight to midnight Canberra ACT Australia shall be regarded as one parcel.

 

 

 

 

1 ACCEPTED SOLUTION

Accepted Solutions
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Best answer

ATO Certified

Community Support

Replies 1

Hi @Jack1,

 

Thanks for getting in touch!

 

We can provide general information here on our Community and your query is more complex for us to provide a definite answer here on our Community. 

 

To receive a more tailored response relating to your specific circumstances, its recommended to write to us to request a private ruling. Private rulings are binding advice from us that explains our view on how tax law applies to your specific situation. These rulings are a free service, and we usually respond within 28 days from receiving your request.

 

Thanks, JodieH.

7 REPLIES 7

Devotee

Replies 5

Previous post regime from quick read while its intent seems supporting of trust suggested, not “closely held”and trustee “regulated entity” etc is a likely cost bar too high.
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Devotee

Replies 4

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Devotee

Replies 3

Practical Compliance Guidelines
PCG 2016/16
Fixed Entitlements and Fixed Trusts
https://www.ato.gov.au/law/view/document?docid=COG/PCG201616/NAT/ATO/00001
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Devotee

Replies 2

It would seem a transparent trust does not have to register for tax and lodge tax returns unless asked to do so?

http://law.ato.gov.au/atolaw/view.htm?docid=PSR/PS20002/NAT/ATO/00001
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Best answer

ATO Certified

Community Support

Replies 1

Hi @Jack1,

 

Thanks for getting in touch!

 

We can provide general information here on our Community and your query is more complex for us to provide a definite answer here on our Community. 

 

To receive a more tailored response relating to your specific circumstances, its recommended to write to us to request a private ruling. Private rulings are binding advice from us that explains our view on how tax law applies to your specific situation. These rulings are a free service, and we usually respond within 28 days from receiving your request.

 

Thanks, JodieH.

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Anonymous

Replies 0

My apologies .. wrong post ...