Unit Trusts

Learn what an Australian fixed unit trust is, how best to manage a unit trust set up in Australia and more.

How do you remove a Unit Holder?

Much like in a company structure, a Unit Holder can sell his or her units back to the Trustee if the Trustee agrees to re-purchase the units. Alternatively, the Unit Holder can sell them to the other Unit Holders (transfer of Units) in the Trust. If no Unit Holder wants to purchase the Units then the units may be sold on the open market if a purchaser can be found.

How is a new Trustee added to a Unit Trust?

To add a new Trustee is relatively simple. The appointment can be made verbally or in writing; preferably in writing. The appointment is made by a 62% majority vote of the Unit Holders. Generally the appointment is in the form of a Trust deed because a Trust deed is a more legally binding document. The additional Trustee must when accepting the appointment undertake to carry out the duties of Trustee and discharge the obligations contained in the Trust deed and at law.

How is a Trustee in a Unit Trust changed?

The Patricia Holdings Unit Trust provides that 62% of the Unit Holders have the power to remove and appoint a Trustee (clause 34). This percentage is a purely arbitrary figure and could be any other percentage as long as it is a majority percentage.

What is a Hybrid Unit Trust?

A Hybrid Unit Trust combines a Multiclass Unit Trust with a Family Trust component to allow a Trustee to distribute to the lineal and lateral relations of the Unit Holders in addition to Unit Class related distributions.

What is a Fixed Unit Trust for NSW Land Tax purposes?

Revenue NSW’s definition of a Fixed Trust states that it is a trust where the beneficiaries (or Unit Holders) are considered to be owners of the land at the taxing date of midnight on 31 December prior to the tax year.

This type of Trust applies only to NSW. It is a standard Unit Trust whereby the unit holders are entitled to a fixed proportion of income and capital distribution from the Trust. Revenue NSW stipulates that the Deed must meet the following criteria:

  • The unit holders are entitled to all income of the Trust (after the payment of normal expenses)
  • The unit holders are presently entitled to the capital of the Trust and may require the Trustee to wind up the Trust and distribute the property or the net proceeds of the Trust
  • Unit Holder entitlements cannot be removed, restricted or otherwise affected by the exercise of any discretion or by failure to exercise any discretion.
  • There must only be one class of units issued and the proportion of trust capital to which a unit holder is entitled on winding up or surrendering of units must be fixed and must be the same as the proportion of income of the trust to which the unit holder is entitled.

If a Trust meets the requirements of section 3A of the Land Tax Management Act, then the Trust will not, for Land Tax purposes, be deemed a Specialty Trust and will be entitled to the benefit of the Land Tax threshold exemptions available in NSW.

What is a Multi-Class Unit Trust?

This form of Trust is a Trust with different classes of units each having different rights to share in the distribution of capital and income. Some units may have a right to vote and others may not, similar to different Shares in a company structure. Our Multi Class Unit Trust provides 13 different classes of Unit each with differing rights.

What is a Standard Unit Trust?

A Standard Unit Trust is a Trust divided into units all of the same class that gives the Unit holders equal rights to vote and share in the distribution of income and capital in proportion to the number of Units held.

A Unit Trust  does not have a Settlor.

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Unit Trusts

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