Client often got a lot of enquiries about trust structure, some want to use trust to invest properties or holding assets. We wrote an article for family trust before. Today, I would like to write some general information related to other types of trusts. For more professional suggestions, please consult with our professional team. What is trust? Trusts are widely used for investment and business purposes. A trust is an obligation imposed on a person or other entity to hold property for the benefit of beneficiaries. While in legal terms a trust is a relationship not a legal entity, trusts are treated as taxpayer entities for the purposes of tax administration. Trustee A trustee may be a natural person or a company. The trustee is responsible for managing the trust's tax affairs, including registering the trust in the tax system, lodging trust tax returns and paying some tax liabilities. Beneficiaries A Beneficiary can be a person, company, another trust or a charitable entity that nominated to receive the benefit of the trust property. Beneficiaries may have an entitlement to trust income or capital that is set out in the trust deed or they may acquire an entitlement because the trustee exercises a discretion to pay them income or capital.
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Client often ask whether they are Australian resident for tax purpose or not. Generally, if a taxpayer is an Australian resident for tax purposes, all income earned both in Australia and internationally, is declared on the tax return. If a taxpayer is a non-resident for tax purposes, only all income earned in Australia is declared on the tax return. Also, for company registration purpose, Australian Company need to have local directors, which mean one director must be tax resident and has a residential address in Australia. That’s why we write this article to explain the main concept to help you understand the tax resident mean, which is different to the permanent resident we normally refer to. Generally, Australian Tax Office (“ATO”) consider you to be an Australian resident for tax purposes if you: • have always lived in Australia or you have come to Australia and live here permanently; • have been in Australia continuously for six months or more, and for most of that time you worked in the one job and lived at the same place; • have been in Australia for more than six months during financial year, unless your usual home is overseas and you do not intend to live in Australia; • go overseas temporarily and you do not set up a permanent home in another country, or • are an overseas student who has come to Australia to study and are enrolled in a course that is more than six months long. There are four tests for residency, namely resides test, domicile test, 183 day test, and superannuation test. An individual only needs to satisfy one of these tests to be considered a resident of Australia for tax purposes. The resides test is the primary test. The other three tests are sometimes referred to as the statutory tests.
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