The GST treatment of bare trusts

2016-09-13T02:36:04Z (GMT) by Paul Stacey
In commercial structures legal title to assets is often held in bare trust. There are various reasons for doing so. The motivation may be a desire for anonymity. An express trust bare trust can be an efficient entity for pooling income yielding assets. In all instances it is intended that the benefits of ownership will pass more-or-less seamlessly to the beneficiary, who may or may not also be the settlor. The issue from a GST perspective is whether this goal may be attained. There are no statutory references to bare trusts in the GST Act. This raises the first issue. What is, or is not, a bare trust largely depends on the statutory context in which the term appears. There are several possibilities. If the term does not appear in the GST Act, which meaning does it take for GST purposes? Further uncertainties are apparent. Can a bare trustee also be regarded as an agent at law? Is a bare trustee an entity for GST purposes? Can a bare trustee carry on an enterprise and hence be registered? Is the settlement of legal title in bare trust "a supply" by the settlor? If so, is there consideration for that supply such that it could be a taxable supply? Can input tax credits be claimed on third party supplies to the bare trustee? If so, which entity can claim them? Further, what is the Australian Taxation Office's published view on these issues? There is, at least, a known answer to that question: it does not have one. Therefore, how does it administer the GST law?

9(1): 36-81