- select a trustee who will agree to be responsible for administering the trust in accordance with the terms of the trust deed;
- have a lawyer prepare a trust deed (a legal document that sets out the rules for establishing and operating the trust) that is to be signed by the trustee;
- give the assets (even if only a nominal amount) to the trustee;
- pay stamp duty to the Office of State Revenue if a trust is created over ‘dutiable property’, as that term is defined in the Duties Act 2001 (Qld); and
- apply for an ABN and TFN for the trust online via the Australian Business Register or through a lawyer or accountant.
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Buying/starting a professional service firm by non-resident
There are various ways you can structure and run a business in Australia, each involving different legal obligations. The professional services firm in Queensland you are considering buying may currently be structured as a proprietary company, a partnership or sole proprietorship.
Proprietary company
Proprietary companies in Australia are regulated by the Corporations Act 2001 (Cth). This legislation allows foreign citizens to be directors of companies. However, for proprietary companies, there must be at least one director who ordinarily resides in Australia. This means you can be a director of the Queensland business you are considering buying, but you would need to appoint an additional director who lives in Australia.
Australian law also places special legal duties on directors of companies. For example, a director needs to know what their company is doing and must ensure the company keeps proper records. If you intend to be a director of the Queensland business, you will still be required to comply with your legal duties as a director even though you are based overseas for most of the year.
If you simply intend on becoming a shareholder of the business (and not a director), then your control over the running and management of the company will be limited to your rights as a shareholder. For example, you would be entitled to vote at general meetings but you would not be able to set the strategic direction of the business, as this power sits with the director(s) of the company.
Partnership
If the Queensland business is structured as a partnership, you would be joining the existing partnership as a partner of the firm. This would require you to sign an accession deed under which you would agree to be bound by the terms of the partnership agreement. This document sets out how the partnership operates, including your level control over management of the business. Importantly, partners in a partnership owe special legal obligations to each other and one partner’s liability can affect the entire partnership. Subject to the terms of a partnership agreement, there are generally no restrictions on a foreign resident becoming a partner of a partnership in Australia.
Sole proprietorship
If the Queensland business is currently operated as a sole proprietorship, this could present difficulties for you when purchasing the business. Without a company or partnership structure, it is possible that the outgoing principal holds all the business agreements (such as leases and customer contracts) in his or her own name. Assigning these agreements to you as the incoming purchaser may be a difficult and time consuming process.
Other issues to consider
You should also be aware that, as a foreign resident, you may be taxed by the Australian Taxation Office on your Australian-sourced income, such as the money you earn working in Australia running the Queensland business.
We suggest that you speak to a lawyer about the various legal issues that you may face in purchasing and running the Queensland business, regardless of how it is structured. A lawyer can help you understand your options, the risks you may face in buying the business, and your legal responsibilities after purchase. By pressing the "Take Action" button - which opens late July 2015 - LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services.
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Trust
A trust is an arrangement where one person or organisation (the trustee) holds assets (the trust property) on behalf of another person (the beneficiary). Trusts can be established for a number of reasons such as tax planning, providing for children or charitable causes.
The requirements for setting up a trust depend on the type of trust you want to establish and its purpose. To create any trust in Queensland, you will need to:
You should also be aware of additional legal requirements that apply to particular types of trusts. For example: a trust used to run a business must be registered for GST if annual turnover is $75,000 or more; a trust used to run a self-managed super fund must ensure it complies with the relevant superannuation and taxation laws that apply to it; and charitable trusts are subject to special laws and may be eligible for tax exemptions.
You should speak to a lawyer if you want to set up a trust in Queensland. By pressing the "Take Action" button - which opens late July - LawAdvisor can help you search for experienced lawyers and obtain fee proposals for their services.