Private ruling: Entity
Date of advice: 29 August 2017
Published: December 2017
Ruling period: Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you, as an individual, an entity for tax purposes? | A1: Yes. | Q2: Are you a separate entity from each of the following entities: ● Individual 2 ● Trust 1 ● Trust 2 ● Superfund 1 ● Superfund 2? | A2: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 960-100

Reasons for decision: Detailed Reasoning - Detailed reasoning: Entity Section 960-100 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an entity and states: Entity means any of the following: (a) an individual; (b) a body corporate; (c) a body politic; (d) a partnership (e) any other unincorporated association or body of persons; (f) a trust; (g) a superannuation fund; (h) an approved deposit fund. Under subsection 960-100(2) of the ITAA 1997 the trustee of a trust, of a superannuation fund is taken to be an entity consisting of the person who is the trustee, or the persons who are the trustees, at any given time. As stated in note 2 in subsection 960-100(2) of the ITAA 1997, the entity that is the trustee of a trust or fund does not change merely because of a change in the person who is the trustee of the trust or fund, or persons who are the trustees of the trust or fund. Subsection 960-100(3) of the ITAA 1997 states that a legal person can have a number of different capacities in which the person does things. In each of those capacities, the person is taken to be a different entity. As highlighted in the example provided in subsection 960-100(3) of the ITAA 1997, in addition to his or her personal capacity, an individual may be ● sole trustee of one or more trusts; and ● one of a number of trustees of a further trust. In his or her personal capacity, he or she is one entity. As trustee of each trust, he or she is a different entity. The trustees of the further trust are a different entity again, of which the individual is a member. A superannuation fund has the meaning given by section 10 of the Superannuation Industry (Supervision) Act 1993 (SISA). A self-managed superannuation fund has the meaning given by sections 17A and 17B of the SISA. A self-managed superannuation fund is a superannuation fund. Therefore a self-managed superannuation fund is an entity under section 960-100 of the ITAA 1997. Change of name for entity The trust name is generally consistent from year to year. However a name change can occur. Where a change of trust name does occur, such decisions should be documented by way of Trust Minutes and any variations to the Trust Deed must be documented by way of a Deed of Variation. Where the trust name is legally changed, you should advise the Australian Taxation Office (ATO) and other relevant organisations in writing at the time the change is made. Merely changing the name of a trust does not create a new entity. Therefore if ABC Trust changed its name to XYZ Trust, this change alone does not create a new entity. The trust remains the same entity. It is similar to when a person gets married and changes their name. The entity remains the same, albeit with a different name. Where an entity changes their name, they keep the same tax file number. Change of trustee Changing the trustee of a self-managed superannuation fund is more than just preparing a trustee minute. You need to ensure you comply with the trustee/member rules. You also need to satisfy the requirements set out in the Trust Deed. Before a new trustee is appointed to a self-managed superannuation fund, they should understand their obligations and responsibilities in running the fund. The Trustee Declaration form must be kept in the records of the Fund for a minimum of 10 years. In addition to signing the Trustee Declaration form, the Fund is also required to notify the ATO within 28 days of any trustee or member change in the Fund, via the prescribed change of details for superannuation entities form (NAT 3036). You should also ensure that all changes to trustee’s are compliant with State trust law. Similarly, changing the trustee of a trust should be documented and ensure the requirements of the Trust Deed are met. Trustees’ decisions should be the subject of formal minutes. The ATO should be notified of these changes. A change of the trustee of a trust or superannuation fund does not create a new entity. The trust and/or superannuation fund remain the same entity. Where the trustee is changed, the relevant trust or superannuation fund keeps the same tax file number. Joint trustees The trustee is the legal entity who owns the assets, manages the trust and enters into contracts as trustee of the trust. A trustee can be either one or more individuals, or a company. Two or more entities can be trustees of the same trust. Each trustee must play an active role in managing the trust and comply with their duties as trustee. Where there are two trustees, each one is jointly responsible for the running of the trust entity. That is, there are two trustees for the one trust entity. The role of the joint trustee is a separate capacity to their individual capacity and a separate capacity to any other trust they may be sole or joint trustee for. Australian Business Number Not everyone needs an Australian Business Number (ABN) and not everyone is entitled to one. If you are running a business you will need an ABN. However you are not entitled to an ABN for an activity if you've been engaged to carry it out as an employee. Where a trust carries on an enterprise in Australia, they need an ABN. If a self-managed superannuation fund has at least one trustee, a trust deed, identifiable members and assets put aside for the benefit of its members, they can apply for and obtain an ABN. An individual may not need an ABN. That is, an entity does not always need an ABN. Separate entities Each of the following are separate entities under section 960-100 of the ITAA 1997: ● individual 1 ● individual 2 ● Trust 1 ● Trust 2 ● Superfund 1 ● Superfund 2 Even though the banks and other organisations may refer to the above entities in a different format, they are the same entity for tax purposes and for section 960-100 of the ITAA 1997 purposes.

Relevant facts: You and your relation are trustees for Trust 1. | You and your relation are trustees for Trust 2. | Company 1 is trustee for Superfund 1. You are a director of company 1. | Company 2 is trustee for Superfund 2. You are the director of company 2. | All parties listed have their own separate tax file numbers. | All parties listed lodge their own income tax returns. | All parties listed carry on their own separate enterprises/ventures/investments. | All parties listed derive their own assessable income. | Each trust has its own separate trust deed. | Each superannuation fund has its own separate legal super fund trust deed. | Trust 1 and Trust 2 currently have the same individuals as trustees. | The trusts and superannuation funds have been referred to by other organisations such as banks in many ways including the following: | Trust 1 is also referred to as: | Individual 1 and individual 2 as trustee for Trust 1 | Individual 1 and individual 2 in trust for Trust 1.