Can a foreign resident be a trustee of trust?

Can a foreign resident be a trustee of trust?

There is no restriction of a non-resident to be a trustee of a trust. In Victoria, if the trustee remains out of Victoria for more than one year (which will be the case for a non-resident), the appointor may appoint one or more other persons to be trustee or trustees in place of the existing trustee.  Therefore, it would be prudent for you to also be the appointor of the trust to protect your interests and not be replaced as trustee. Appointer is the person who has the power to appoint and remove the trustee.

Residency of trusts

A trust is a resident of Australia for an income year if the trust has a resident trustee at any time during the income year or the central management and control (CMC) of the trust was in Australia at anytime during the income year. A non-resident trust is a trust that not a resident of a trust.

We often get asked whether all trustees need to be residents if a trust has multiple trustees in order for the trust to be a resident. The answer is no, only one needs to be a resident where the other trustees are not Australian resident for taxation purposes. The tests are interactive. For example, a trust with a foreign trustee (be a company or an individual trustee) will be considered as an Australian resident trust if the trustee  carries on business in Australia and the company’s CMC is in Australia causing the trustee to be an Australian resident.

Conversely if the non-resident trustee is the sole trustee and their central management and control are in overseas, the trust will automatically become a non-resident trust. There are tax consequences when the trust becomes a non-resident trust. Please reach out to us if you would like to find out more regarding the tax consequences when the trust becomes a non-resident.

Disclaimer: The material and contents provided in this blog are general guide and informative in nature only. They are not intended to be seen as legal and tax advice. If expert assistance is required, you should seek your own advice for any legal, tax or investment issues raised in your affairs.