How to Establish a Trust in Australia

To establish a trust in Australia, you need to choose the right type of trust, appoint a trustee, identify the beneficiaries, prepare and execute a trust deed, complete the required tax registrations and set up proper financial records.

A trust can support business ownership, investing, succession planning and asset management. However, it must be set up correctly from the beginning. The trustee will have legal, tax and record-keeping responsibilities, so professional accounting and legal advice should be obtained before documents are signed or assets are transferred.

Quick summary

• A trust is a legal relationship where a trustee holds and manages assets for beneficiaries.
• Common options include discretionary trusts, often called family trusts, and unit trusts.
• The trust deed sets out how the trust must operate.
• The trustee can be an individual or a company.
• A trust generally needs its own Tax File Number.
• An Australian Business Number is required when the trust carries on an enterprise.
• GST registration is generally required once GST turnover reaches $75,000.
• Trusts have annual tax, distribution, reporting and record-keeping obligations.
• M2 Corporate’s trust establishment service starts from $1,200 one-off.

What is a trust?

A trust is an arrangement where a person or company, known as the trustee, holds property or other assets for the benefit of other people or entities, known as beneficiaries.

A trust is not generally a separate legal entity. The trustee acts for the trust, enters contracts, controls trust property and is legally responsible for its operations. The trustee may be an individual or a company.

For example, a family may establish a discretionary trust to hold business shares or investments. A company could act as trustee, while family members and related entities are listed as potential beneficiaries.

You can learn more about what a family trust is before deciding whether this type of structure suits your circumstances.

Why do people establish trusts?

People establish trusts for several reasons, including:

• Operating a business
• Holding investments
• Managing family wealth
• Supporting succession planning
• Bringing several investors into an arrangement
• Managing assets for children or other family members
• Separating control of an asset from the people who benefit from it

A properly established trust can also support an asset protection strategy. However, a trust does not automatically protect every asset from every claim. The outcome depends on factors such as the trustee structure, ownership arrangements, personal guarantees, the trust deed and how the trust is managed.

Read more about the role of asset protection when planning your business or investment structure.

What type of trust should you establish?

Choosing the right trust type is one of the most significant decisions in the establishment process. Different trusts provide different rights, controls and tax outcomes.

Discretionary trust

A discretionary trust gives the trustee discretion over which beneficiaries receive trust income or capital, subject to the trust deed.

These structures are often called family trusts. However, a discretionary trust is only treated as a family trust for specific tax purposes when its trustee makes a valid family trust election. Simply including the words “family trust” in its name does not create that tax status.

Discretionary trusts are commonly considered for:

• Family-owned businesses
• Family investment activities
• Wealth management
• Succession planning
• Structures requiring flexibility over distributions

Unit trust

A unit trust divides the beneficial interest in the trust into units. Each unit holder generally has a defined interest based on the number and class of units they hold.

Unit trusts are commonly considered when:

• Unrelated parties are investing together
• Ownership percentages need to be clearly recorded
• Investors require more predictable rights to income and capital
• A business or property will be jointly owned

Hybrid trust

A hybrid trust combines features of discretionary and fixed trusts.

These structures can be more difficult to administer and may create complex tax and finance issues. They should only be used where the deed and tax treatment have been carefully reviewed.

Testamentary trust

A testamentary trust is created under a will and generally begins after the person who made the will dies.

It is mainly used for estate planning rather than establishing a current business or investment structure. Legal estate planning advice is required when preparing this type of trust.

How to establish a trust step by step

The following process explains how to establish a trust for business, investment or family purposes.

1. Define the purpose of the trust

Begin by identifying what the trust will do.

Questions to consider include:

• Will the trust operate a business?
• Will it hold shares, property or other investments?
• Who should benefit from the trust?
• Will unrelated parties have ownership interests?
• Who should control the trustee?
• How should the structure work if a key person dies or becomes unable to act?
• Will the trust employ workers?
• Will it need to register for GST?

The answers help determine whether a discretionary trust, unit trust or another structure is appropriate.

A trust should not be chosen only because someone has said it will reduce tax. The commercial purpose, expected income, asset ownership, administration costs and planned exit should also be considered.

M2 Corporate can review these matters as part of its business setup services.

2. Choose the trustee

Every trust needs a trustee. The trustee is responsible for administering the trust according to the trust deed and applicable law.

The trustee can be:

• One or more individuals
• An Australian company
• Another permitted legal entity

Individual trustee

An individual trustee can be less expensive to establish because a separate company may not be required.

However, changing an individual trustee can create additional paperwork, particularly where assets or contracts are held in the trustee’s name.

Corporate trustee

A corporate trustee is a company established or appointed to act as trustee.

Using a company can provide clearer separation between personal and trust activities. It can also make changes in control easier because the company remains the trustee even when its directors or shareholders change.

The company must be registered with ASIC. A trust itself is not registered as a company, but a company acting as trustee must appear on the companies register.

The company registration fee, annual ASIC review fee and company compliance requirements should be included when comparing the options.

3. Identify the key parties

The people and entities connected to the trust must be identified before the deed is prepared.

Depending on the type of trust, these parties may include:

These roles should not be selected without considering long-term control, succession and estate planning.

For example, the appointor of a discretionary trust may hold significant control because the trust deed can give that person the power to replace the trustee. The appointor provisions should therefore be aligned with the person’s will and broader succession plans.

4. Prepare the trust deed

The trust deed is the main governing document for the trust.

It generally records:

• The name of the trust
• The trustee’s identity and powers
• The beneficiaries or beneficiary classes
• How income and capital can be distributed
• The role and powers of the appointor
• How trustees can be appointed or removed
• Rules for issuing or transferring units, where relevant
• How the deed can be amended
• When the trust will vest or end
• How trust records and decisions must be maintained

The deed should be tailored to the intended purpose and reviewed by a qualified legal professional. Generic templates can contain terms that do not suit the proposed business, investment, lending or estate planning arrangements.

Government guidance states that trusts require a formal trust deed and can be difficult to change or dissolve once established. Professional advice should be obtained before registration.

5. Execute and settle the trust

The deed must be signed and witnessed in line with its terms and the applicable legal requirements.

The settlor generally provides an initial amount to establish the trust. This amount becomes the trust’s first property and should be recorded correctly.

The trustee should then complete the initial trustee minutes or resolutions. These records normally confirm matters such as:

• Acceptance of the trustee appointment
• Receipt of the settlement amount
• Establishment of the trust
• Opening of a trust bank account
• Applications for tax registrations
• Appointment of accountants, lawyers or other advisers

Do not backdate the trust deed or trustee resolutions. The trust should be validly established before it enters agreements, starts trading or acquires assets.

6. Register a corporate trustee if required

Where a new company will act as trustee, it must be registered with ASIC.

The company will receive:

• An Australian Company Number
• A certificate of registration
• A corporate key
• Ongoing annual ASIC obligations

The company constitution and company records should allow the company to act as trustee.

Corporate trustee documents should also clearly record that the company is acting in its trustee capacity. For example, contracts may identify the party as:

ABC Pty Ltd as trustee for the ABC Family Trust

This helps distinguish trust activities from any activities conducted by the company in its own right.

7. Apply for a TFN and ABN

The trust’s registrations are separate from the trustee’s personal or company registrations.

The trustee applies for the trust’s registrations in its capacity as trustee.

Tax File Number

A trust that receives income will generally need its own Tax File Number.

The TFN is used when lodging the trust’s tax return and communicating with the Australian Taxation Office.

Australian Business Number

A trust that carries on an enterprise is generally entitled to an Australian Business Number. Not every trust will automatically need one. For example, the requirements for a passive family arrangement may differ from a trust operating a trading business.

Registering for an ABN is free through the Australian Government’s Business Registration Service.

Information commonly required includes:

• The trust deed
• Trust establishment date
• Trustee details
• Beneficiary details
• Business activity
• Contact information
• Tax agent details
• The reason for applying

8. Complete any additional registrations

The trust may need other registrations depending on its activities.

GST registration

GST registration is generally required when annual GST turnover reaches $75,000. Once an entity is required to register, it generally needs to do so within 21 days. An ABN is required before GST registration can be completed.

A trust with turnover below the threshold can sometimes register voluntarily.

PAYG withholding

PAYG withholding registration may be required if the trust:

• Employs staff
• Makes payments to contractors under voluntary withholding arrangements
• Makes certain payments where withholding is required

Business name registration

A trust must register a business name when it operates under a name other than its trust name.

For example, if the Smith Family Trust operates a café called “Westside Coffee”, the trustee may need to register “Westside Coffee” as a business name. ASIC confirms that a trust conducting business under another name must be included on the Business Names Register.

9. Open a trust bank account

The trustee should open a bank account specifically for trust transactions.

The bank may request:

• A certified trust deed
• Trustee identification
• The trustee company’s certificate of registration
• The trust’s ABN and TFN details
• Trustee resolutions
• Details of directors, shareholders, appointors or beneficiaries
• Information about the source of funds

Trust money should not be mixed with the trustee’s personal funds or another entity’s funds.

Separate banking and accounting records make it easier to prepare financial statements, track beneficiary entitlements and show that the trust has been managed as a separate arrangement.

10. Transfer or acquire assets carefully

A trust can acquire assets after it has been established.

However, transferring existing assets into a trust can trigger:

• Capital gains tax
• Transfer duty
• Loan approval requirements
• Refinancing costs
• Contract assignment issues
• Land title changes
• Insurance changes

In Western Australia, transactions involving trust property can have specific duty and documentation requirements. RevenueWA provides separate requirements for discretionary trusts, changes of trustee, declarations of trust and transfers involving trust property.

Obtain tax, legal and duty advice before transferring property, shares or other valuable assets into a new trust.

What documents are needed to establish a trust?

The documents required depend on the trust type and whether a company will act as trustee.

A typical establishment may include:

Additional documents may be required for property ownership, finance applications, succession planning or more complex unit arrangements.

How much does it cost to establish a trust?

M2 Corporate’s trust establishment service starts from $1,200 one-off.

The final cost can depend on:

• The type of trust
• Whether a corporate trustee is required
• The number and type of beneficiaries or unit holders
• The complexity of the trust deed
• Required tax registrations
• Legal advice
• ASIC registration and annual fees
• Property transfers or duty advice
• Finance or ownership documentation

The setup fee should not be the only consideration. Trusts also have ongoing accounting, tax, bookkeeping, legal and administration costs.

A cheaper structure that does not match your goals can be more expensive to correct later.

Current tax changes affecting discretionary trusts

The Australian Government announced in the 2026–27 Federal Budget that a minimum tax rate of 30% will apply to the taxable income of many discretionary trusts from 1 July 2028, with specified exclusions.

The Government also announced three years of rollover relief from 1 July 2027 for eligible businesses and taxpayers that choose to move from a discretionary trust into another structure.

These changes are highly relevant when establishing a new discretionary trust. The expected tax position after 1 July 2028 should be considered alongside asset ownership, succession, administration and commercial goals.

Implementation details can change as the announced reforms are consulted on and put into law. Obtain advice based on the rules in force when the trust is established and when key transactions occur.

What are the ongoing obligations after establishing a trust?

Trust establishment is only the first step. The trustee must continue managing the trust according to the deed and applicable tax rules.

Ongoing responsibilities can include:

• Maintaining the trust deed and amendments
• Keeping trustee minutes and resolutions
• Preparing annual financial statements
• Lodging an annual trust tax return
• Completing Business Activity Statements where registered for GST
• Managing PAYG withholding
• Recording beneficiary entitlements
• Preparing annual distribution resolutions
• Keeping asset and ownership records
• Maintaining unit registers for a unit trust
• Updating ABN and business registration details
• Completing company obligations where there is a corporate trustee

The ATO states that a trustee generally needs to lodge an annual trust tax return. Who pays tax on the trust’s income depends on how the income is distributed and the relevant tax rules.

Annual distribution resolutions

Trustees of discretionary trusts generally need to make valid resolutions appointing or distributing trust income to beneficiaries by 30 June of the relevant financial year.

Late, incomplete or invalid resolutions can change who is taxed and may result in the trustee being assessed at a higher tax rate.

Resolutions must follow the trust deed. Reusing the same wording every year without checking the deed, income categories or beneficiary circumstances can create problems.

Record keeping

Most business and tax records must generally be retained for at least five years. Some records need to be kept longer, particularly where they relate to asset ownership, capital gains tax or transactions that have not been completed.

The trust deed, deed amendments, trustee appointment documents, ownership registers and core establishment records should be retained securely for the life of the trust.

Get professional help establishing your trust

Setting up a trust involves more than ordering a deed. The trustee, beneficiaries, control arrangements, registrations and ongoing obligations must all support the purpose of the structure.

M2 Corporate provides trust establishment services in Perth, including:

• Trust deed documentation
• Trustee minutes and resolutions
• TFN and ABN applications
• GST registration where required
• Trustee and beneficiary records
• Unit and ownership documentation
• Compliance handover and practical guidance

Our trust establishment service starts from $1,200 one-off.

We work directly with you to understand your intended business, investment or family structure before preparing the required documents and registrations.

Ready to establish your trust with clear records and practical advice? Contact our business advisors in Perth to book a free strategy session and explore.

Disclaimer: This article provides general information only and does not constitute legal, tax or financial advice. Trust laws, tax rules and duty requirements depend on your circumstances and can change over time.

FAQs

Can I establish a trust myself?

It is possible to obtain template documents and apply for registrations yourself. However, a trust deed is a legal document and small errors can affect control, distributions, tax treatment and asset ownership.

Government guidance recommends speaking with a professional business adviser, lawyer or accountant before registering a trust.

Professional support is particularly useful where the trust will hold property, operate a business, include several family groups or use a corporate trustee.

Does a trust need an ABN?

A trust generally needs an ABN when it carries on an enterprise.

A trust that only holds passive assets may have different requirements. The trustee should confirm the trust’s ABN entitlement based on its planned activities.

Does a trust need its own TFN?

A trust that earns income generally needs its own TFN.

The trust’s TFN is separate from the TFN of an individual or company acting as trustee. The trustee applies in its capacity as trustee.

Does a trust need to register for GST?

A trust generally needs to register for GST when its annual GST turnover reaches $75,000.

Registration may also be required regardless of turnover for some activities, while voluntary registration can be available below the threshold.

Can a trust own property?

The trustee holds legal title to property on behalf of the trust.

Before purchasing or transferring property, obtain advice about the contract name, finance approval, land tax, transfer duty, capital gains tax and trust deed requirements.

Can the trustee be changed later?

A trustee can often be changed in accordance with the trust deed.

Changing trustees may require a deed of retirement and appointment, trustee resolutions, registration updates and changes to asset titles. Duty requirements can also apply when property is transferred because of a trustee change.

Can beneficiaries be added later?

Some discretionary trust deeds allow broad classes of beneficiaries or provide a process for adding beneficiaries.

Changing beneficiaries can have tax, duty, asset protection and family law consequences. The deed should be reviewed before making any change.

Is a family trust different from a discretionary trust?

The term family trust is often used to describe a discretionary trust established for a family group.

For tax purposes, however, a trust only becomes a family trust when the trustee makes a valid family trust election. That election can restrict the people and entities that can receive distributions without additional tax consequences.