An Argyle Unit Trust

The Argyle Unit Trust is an extremely popular and tax-effective vehicle through which to:

·	conduct a private business;
·	hold equity interests in private business enterprises;
·	conduct a private investment portfolio.

Why is the unit trust so popular?

Put simply, because it achieves for an investor two of the cornerstone principles of a sound investment strategy: pooling of resources and tax efficiency. The Argyle Unit Trust is a popular and tax-effective vehicle through which a family or specific individual can:

·	gain direct assessable income from underlying trust investments;
·	provide a tax effective income stream to family members through a properly structured unitholding;
·	provide the benefits of pooling resources with other unitholders to make common investments;
·	offer flexibility to unitholders by identifying specific rights attaching to the various classes of units that can be issued to unitholders.

Critical to the planning aspects of effectively utilising a unit trust are:

(a)	the rights attaching to the units on issue; and
(b)	the identity of the unitholders.

The "standard" unit trust has a facility to issue "ordinary units" with pro-rata rights to vote, share in distributions of income and share in capital on winding up or on redemption of the unit. Specifically tailored unit trusts can be prepared with unit rights reflecting the parties’ intentions.

Depending on a client’s specific objectives, the unitholders may be natural persons, companies, trusts, partnerships or any combination thereof and different unitholders may, of course, own different classes of units carrying different rights.

Estate Planning
The Argyle Unit Trust can dovetail into a client’s personal estate planning to achieve excellent planning benefits for beneficiaries of an estate. That is, a natural person’s unitholding in an Argyle Unit Trust can be passed to estate beneficiaries to provide an income stream in a tax-effective manner, for example, by properly utilising testamentary trusts as an estate tax planning strategy.

Income Stream
The Argyle Unit Trust provides a unitholder with certainty of income from their investment. Like any other investment a person undertakes in order to obtain an assessable income the unitholder entitled to the fixed stream of assessable income from the Unit Trust should be entitled to claim deductions for any losses or outgoings incurred in obtaining the assessable income, such as interest incurred by the unitholder on any loan taken in order to make the investment.

Tax Efficiency
Current Australian tax laws offer significant tax benefits for investing through a properly structured unit trust. In summary these benefits are:

·	the unitholder entitled to a fixed distribution of assessable income is able to claim tax deductions for expenses or outgoings (eg interest on money borrowed to acquire the units) incurred in gaining or producing that assessable income;
·	availability of the CGT 50% discount capital gain concession where capital gains are distributed to natural person unitholders or to trust unitholders who on-distribute the capital gain to natural persons;
·	potential for flexible income splitting most particularly where a discretionary trust is a unitholder;
·	capacity for loans to be made to unitholders tax-effectively and in a flexible manner.

Great care should be taken when using unit trusts for tax planning purposes, particularly when access to the CGT small business concessions are sought as it may not always be possible to flow all of these benefits through to unitholders.

Asset Protection
Very specific laws apply to unit trusts in terms of the asset protection benefits they provide. Properly structured, a unit trust can also offer clients significant asset protection benefits in relation to activities of the unit trust or activities external to the unit trust, as the case may be. The trust terms, identity of unitholders and unit rights are critical aspects to this planning.

Why the Argyle Unit Trust?
The Argyle Unit Trust deed has all of the clauses, trustee discretions, flexibility and trustee powers necessary to ensure that the trust unitholder will benefit to the full extent possible under current Australian laws dealing with income tax, capital gains tax, bankruptcy, estate planning, stamp duty and commercial business practice.

The Argyle Unit Trust deed is prepared by our team of tax lawyers and regularly updated by that team for relevant changes in the income tax laws, stamp duty laws, bankruptcy laws, the Trustee Act and other relevant legislation.

As part of our trust review service we are instructed to review a vast number of trust deeds including many unit trust deeds. We know that some trust deeds lack important basic clauses. Some trust deeds have poorly drafted or inflexible clauses. Some trust deeds lack the “extra special” clauses that can provide a significant difference to the after tax financial position of unitholder. Not all unit trust deeds available in the market offer unitholders all of the planning benefits to which a client is legally entitled. Some poorly drafted trust deeds will expose the trustee and unitholder to significant, unnecessary and unintended tax and stamp duty costs. Further, some trust deeds simply do not have sufficient scope and flexibility of trustee powers to allow easy control and administration of the trust at a practical level.

In short, we believe the Argyle Unit Trust service can offer the following significant benefits to clients:

·	the Argyle trust deed is prepared by our team of tax lawyers all of whom have considerable expertise and experience in dealing with trust related matters and who can tailor the terms of your trust deed to meet your specific objectives;
·	the "before and after" service provided by the Tax Team at Argyle Lawyers which helps you through the establishment process and helps you in understanding how best to utilise your trust;
·	the Argyle trust deed comes with an extensive package of supporting documents including pro-forma trustee minutes and forms dealing with establishment and issue of units of the trust; and
·	at a technical level, the clauses in the trust deed provide the unitholder with the ability to take advantage of every tax planning opportunity that exists under current Australian tax laws (see above)

The Unit Trust Deed contains:

·	specific mechanisms designed to protect the trustee from actions brought against them as a result of activities that they may undertake in their capacity as trustee;
·	contains specific clauses to protect against the unintended and often significant stamp duty implications that can arise under the New South Wales Duties Act;
·	contains very precise mechanisms by which control of the trust can be tailored to meet your immediate needs and objectives and to allow succession of that control to be planned for again to meet your specific longer term objectives;
·	specific clauses that, where appropriate, allow it to dove-tail with a client’s estate planning strategies.

If you would like further information click here to e-mail our Tax and Superannuation Team.

Argyle Lawyers Pty Ltd prides itself on providing personal and tailored advice and products. If you would like to us to prepare the Unit Trust for you please login to our Client Resources Page to download the relevant instruction sheet and notes to assist you to complete the instructions.

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