Trust, but verify.

  • We all need to trust someone
  • Is that why Trusts were invented for businesses?
  • Reasons Trusts are used
  • Who can be a Trustee
  • Who can be Beneficiaries?
  • How does this relate to finance?
  • What’s needed when doing finance with a Trust involved?
  • How can we trust others when it comes to doing business?
  • How can we trust TPC finance
  • Who is TPC
  • How do I as a vendor get involved with TPC
  • How can I as a client organise finance with TPC

“Trust is a business communication skill which, in combination with behaviour, either works to build trust or destroy it.” L. Finkle.

TPC Finance is excited to enter the social media space. This is an opportunity to communicate with existing and prospective clients and business equipment supplier on a range of topics relevant to finance. This post is in relation to Trusts; not just the trust desired in order to do business, but the legal entity that many small to medium enterprises (SME) have chosen to include in their business structure.

According to WA smallbusiness “A trust is a structure where a trustee carries out the business on behalf of the trust’s members (or beneficiaries). A trust is not a separate legal entity [and]… is set up through a trust deed.”  There are many reasons to set up a Trust, including the separation of asset ownership (beneficiary) and control over the asset (the trustee), flexibility in tax planning and other tax benefits, protection for the beneficiary – especially from financial claims, and to use as a business entity for investing or trading (lawsociety.com.au).

Tony Melvin helps explain on the flyingsolo blog that “a person or company agrees to hold assets for the benefit of another. The one who holds the assets is called the trustee; those who benefit are called beneficiaries [Figure 1].”

The trustee is therefore legally liable for the debts of the trust, using the assets to help meet those debts. The two main types of trusts used in Australia is the discretionary or unit trust. “In a discretionary trust, the trustee has discretion in the distribution of funds to each beneficiary. In a unit trust, the interest in the trust is divided into units with their distribution determined by the number of units held by each member. In either case the trust is not liable to pay tax. Instead tax is assessed to the trustee or the beneficiaries that are entitled to receive the trust net income (WA smallbusiness).”

How does this relate to finance?

“Trust, but verify” Ronald Reagan

The Australian Government, in agreement with other countries, have included the Know Your Customer (KYC) requirements under the Anti-Money Laundering / Counter Terrorism Financing (AML/CTF) Act, which requires certain Financiers to understand the beneficial ownership of non-individual customers (including Trusts). Depending on the Financier, there are different interpretations and requirements when determining the beneficiaries of the business. This can range from requesting certified copies of the Trust Deed through to a simple Declaration, completed and signed by the Trustee. A copy of the signatory’s Drivers Licence is also required, to help verify matching signatures.

Here at TPC Finance, we’re about keeping the finance application and settlement process as clear and simple as possible, while communicating with our clients and introducers along the way. You can be assured that we have our clients’ interests foremost in mind and trust you’ll find our services to be both professional and personable.

Click here to find out more about TPC Finance, or here if you’re a business equipment supplier that would like to know more about offering finance to customers as another purchase option.

Jason Albrecht has over 15 years’ business and industry experience with equipment finance and is currently completing his Masters in Applied Finance (due 2017).

 

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