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A common question for trustees, accountants, and tax advisors is whether appointing a new trustee to a trust triggers Goods and Services Tax (GST) on the transfer of trust assets. This article explains the Australian Taxation Office’s (ATO) position as outlined in GSTA TPP 050, helping you navigate these situations correctly.

Understanding the Core Principle

Key Takeaway: When a trustee changes but the underlying trust remains the same, the transfer of assets from the old trustee to the new trustee is not a supply for GST purposes. Therefore, no GST is payable on the transaction.

Step-by-Step Application

Step 1: Identify the Legal Structure

1. Confirm the Entity: Under GST law, a trust is considered an “entity” (GST Act s 184-1(1)(g)).
2. Understand the Legal Fiction: While a trust itself cannot hold rights or obligations, the law “pretends” the trustee is the trust for GST purposes. This means:
   • The trustee (e.g., Company A) is taken to be the trust entity.
   • If the trustee changes (e.g., to Company B), the person who is taken to be the trust entity simply changes.
   • The underlying trust (the entity) remains the same.

Step 2: Analyse the Transaction

Apply the ATO’s reasoning to your situation:

• Scenario: Company A (current corporate trustee) holds all trust assets. The trust deed is amended to appoint Company B as the new trustee. Legal title to assets (land, buildings, etc.) is transferred from Company A to Company B.
• Question: Is this a taxable supply?
• Analysis: Follow this logic:
  1. The entity is the trust (e.g., The Jones Family Trust).
  2. Before the change, Company A is taken to be that entity.
  3. After the change, Company B is taken to be that entity.
  4. The assets have always been, and remain, assets of the same single entity—the trust.
  5. Therefore, transferring legal title between the old and new trustee is not a supply from one entity to another. It is merely a change in the legal representative of the same continuing entity.

Step 3: Complete Administrative Tasks

While no GST is triggered, you must still manage administrative requirements:

• Notify the Australian Business Register (ABR): You must inform the ABR of the change in trustee. This updates the record of who is acting for the entity.
• Important: The trust’s Australian Business Number (ABN) and GST registration (if applicable) do not change. The entity continues seamlessly.

Step 4: Know When This Advice Applies

• Effective Date: This principle applies from 1 July 2000.
• Binding Authority: GSTA TPP 050 is a legally binding public ruling. You can rely on it provided your facts align with the scenario described.
• Prerequisites: This applies specifically to a mere change of trustee where the trust itself continues. It would not apply if the transaction involved creating a new trust or fundamentally changing the trust.

What to Avoid: Common Pitfalls

• Do not lodge a Business Activity Statement (BAS) reporting a GST liability on the asset transfer.
• Do not think a new ABN or GST registration is needed for the new trustee in its capacity as trustee for the existing trust.
• Ensure the transaction is purely a change of trustee and not a restructure that creates a new entity.

Summary

In summary, when replacing a trustee under a continuing trust:

1. The trust is the GST entity.
2. The trustee is legally “taken to be” that entity.
3. Changing the trustee changes who represents the entity, not the entity itself.
4. Asset transfers between old and new trustees are not a supply and attract no GST.
5. Always notify the ABR of the trustee change.

By following this guidance based on the ATO’s ruling, you can ensure compliance and avoid incorrectly charging or remitting GST on trustee succession transactions.

Disclaimer: This article is a guide based on the ATO ruling GSTA TPP 050. It is not personal tax advice. Always review the specific facts of your case with a qualified professional, as complex scenarios or changes in law may require further analysis.