Service Trust

This is a generic name applied to any type of trust (e.g., discretionary, unit or hybrid) which is being used to provide services to a professional practice or other business entity. It is usually controlled by the owners of the professional practice or business entity. Once in widespread use, their numbers have been significantly diminished by the introduction of TR 2006/2.

Advantages

• Asset protection
• Income tax flexibility
• Wealth accumulation
•  Free up working capital
• Service fee of up to 45%of practice fees
• Low risk of tax audit
• Clear benefits to the practice
• Commercially based
• Calculated correctly
• Arrangement documented

Disadvantages

• Fail an ATO audit
  • Arrangement not commercially based
  • Not clearly a separate business
  • Inadequate documentation
• Costs outweigh benefits
• Not easily understood
• No specific obligations:
  • Must keep adequate records to explain transactions
• Extent to which records are kept:-
  • Significance, complexity & materiality of transactions
  • Size of the business

If you would like more information on trust structures and the most appropriate for your situation, please click here to submit an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.