A Bare Trust Deed is established to allow a Superannuation Trust Deed to borrow money for purchasing assets like real estate, listed securities, units in a Unit Trust Deed and even works of art. The Bare Trust holds these assets in trust for the Superannuation Trust Deed without it being exposed to the usual risks associated with borrowing money.
Patricia Holdings also offers a version of the Bare Trust Deed that is suitable for use at the National Australia Bank. Please let us know when ordering your deed if you require this version.
What is included?
- A4 binder (white or grey)
- 4 (3 bound, 1 loose leaf) copies of trust
- Instruction sheet
- Stamping instructions
- Statutory Declaration
PDF email delivery
Full Service Courier delivery
How long does it take to establish a Asset Acquisition Trust Deed?
For email delivery orders, the Trust Deed and related documentation will be emailed to you within 15 minutes of placing your order. If you have ordered a Discretionary Trust package, we need to register the Trustee company before establishing the Trust which means delivery may take up to a hour for both the company register and the Trust deed.
We are able to deliver our full service couriered product to the Sydney metropolitan area within about 4 hours of receiving an order. Orders received before 12 midday are usually delivered the same day. Documents being sent to Brisbane and Melbourne will be sent by courier and are often delivered the next day (order must be received by 1pm for delivery the next day) and within a couple of days to Perth and regional areas.
Duty Stamping of Trust Deeds
Superannuation Trust Deeds do not require stamping. Bare Trust Deeds must be sent to the relevant State Duties Organisation (SDO) along with the related Superannuation Trust Deed for the SDO to any duties payable. It is advisable to send the AAT and SMSF into the SDO within 30 days of the AAT being executed.
What is a bare trust?
This type of Trust was introduced to satisfy the requirements of sections 67 A&B of the Superannuation Industry Supervision Act 1993. A Bare Trust used for Limited Recourse Borrowing Arrangements (LRBA) is established to allow an SMSF to borrow money for an asset. AATs include a number of provisions which address the requirements of the Act - that the Trustee:
- is only permitted to hold one asset on trust (under each Trust arrangement),
- must account to the Trustee of the Superannuation Fund for any income received from the Trust asset; and
- must in the Deed be required to transfer the asset to the Trustee of the Superannuation Fund if requested once the loan has been repaid.
A lending entity is prohibited from having recourse to any asset of the Superannuation Fund other than the asset held in trust by the Trustee of the AAT.
Is it always called a bare trust?
Bare trusts can be known by several other names. A few of these include:
- asset acquisition trust (or AAT)
- custodian trust
- debt instalment trust
Can the Trustee of a Bare Trust used for Limited Recourse Borrowing Arrangements be the same as the Trustee of the related Superannuation Trust?
If the trustee is a corporate trustee then the answer is no. The Superannuation Industry Supervision Act is specific, under section 67 A & B that the Trustee must be a different legal entity. The Trustee can be an individual, a group of individuals or a Company. Directors of the Corporate Trustee of the Bare Trust can be the same as the members of the Fund.
It is in our experience that most banks will not lend to a Bare Trust with individual Trustees.
Who are the parties involved in a bare trust?
A Limited Recourse Borrowing Arrangement (LRBA) involves four main parties; the SMSF trustee, the bare truste trustee, the vendor of an acquirable asset and the lender. As Superannuation law does not allow an SMSF to borrow money, an LRBA is used where the trustee of the bare trust borrows money from a lender to purchase an asset.
Under this arrangement, the asset is held on trust with the trustee of the SMSF holding the beneficial interest. If the event of a default on the loan, the lenders rights are limited to the asset held in the bare trust meaning there is no recourse to the other assets held in the SMSF.
What type of asset can be purchased using a bare trust?
A bare trust can be used to purchase any asset, other than money, provided the trustee of the SMSF is not prohibited from acquiring by the SIS Act or any other law.
Can a bare trust be used to acquire multiple assets?
A bare trust can be used for the acquisition of a “single acquirable asset” meaning it can generally only be used to purchase one piece of property. It may however be possible to acquire multiple property titles providing it is reasonable to conclude that what is being acquired is distinctly identifiable as a single asset.
A bare trust may also be used to acquire a ‘collection of assets’ so long as the assets in the collection are identical and have the same market value (e.g. shares).
A bare trust can also be used to acquire a ‘replacement asset’ to replace an original asset in certain circumstances with the most common being where shares in a company, or units in a unit trust, are being replaced by shares or units as a result of a takeover, merger, demerger or restructure.
Does a bare trust need to register for an ABN, TFN & GST?
The trustee of a bare trust does not need to register for an ABN or TFN, nor do they need to register for GST as the Superannuation fund holds the beneficial interest in the asset, receiving all of the income and being responsible for all of the expenses relating to the asset.
Does a bare trust need to be stamped?
Whether duty is payable and any requirements of stamping a Bare Trust or Asset Acquisition Trust (“AAT”) is dependent on the State. Where lodgement is required it is advisable to send the AAT into the revenue office within 30 days of it being executed.
The following information should be used as a guide only. Stamp duty requirements change over time so we suggest contacting your local revenue office or seeking independent legal advice to confirm your stamp duty obligations.
VIC – No duty is payable on an AAT in Victoria however it is a requirement that the Deed is lodged with SRO. To do this you will need to lodge the Declaration of Trust through an SRO agent on Duties Online or through the SRO’s public lodgement system. As an agent of the SRO we are able to do this lodgement for you for a small fee of $77 incl gst. All we need is:
- A scanned copy of the executed Deed.
- A signed document stating that the Deed was executed in Victoria (template enclosed).
NSW – The OSR’s EDR system does not allow agents to duty stamp AATs. To have your AAT stamped in NSW, you will need to drop the deed and the following other documentation to one of their Revenue NSW locations or post it in to them (we recommend using trackable post). Duty is payable at $500.
- Original executed AAT
- Copy of the executed SMSF and any related amendments or variations
- Copy of the stamped front page of the contract the AAT relates to
- Copies of bank statements with full account holders names and copies of loan agreements
- Purchaser declaration form (ODA 076 I or ODA 076 NI) which can be downloaded from the Revenue NSW website
NT – To have your AAT stamped in NT you will need to drop the executed Deed along with the contract it relates to the Territory Revenue Office or post it in to them (we recommend using trackable post). Duty is payable at $5.
QLD, SA, ACT, TAS & WA – Stamp Duty is not payable on the declaration of Trust.
Should I use a corporate trustee?
A corporate trustee has several advantages over an individual trustee:
A corporate trustee, being a separate legal entity, can exist indefinitely, whereas individual trustees will eventually die, may become incapacitated, or may want out for another reason.
Legal ownership of the trust assets
Assets in a trust are held in the name of the Trustee on behalf of the trust. If individuals act as the trustee of your trust and you later want to change the trustee, you will have to change the legal owner of your trust’s assets. Conversely, you can simply change the shareholders and directors of a corporate trustee which will not change the legal owner of the trust’s assets.
Asset protection & limited liability
Individual trustees can be personally liable for any loans taken out or liabilities that the trust may incur. If a corporate trustee is used, liability will generally be limited to the assets of the trustee company itself.
How to Order
Order by email
- Download Order Form – Asset Acquisition Trust Deed.pdf