ACN, ABN and TFN for trusts, what your trustee needs to register

You have set up a trust, or you are about to, and the paperwork is asking for three numbers: an ACN, an ABN and a TFN. The short answer is that a trust itself never holds an ACN, because an ACN is issued to companies. Whether your trust needs an ABN depends on whether it carries on an enterprise, and a trust should have its own TFN so the trustee can lodge its tax returns.

The reason the answer is not a simple list is that a trust is not a separate legal entity. The trustee holds legal ownership of the trust's assets and manages them for the benefit of the beneficiaries, who hold an equitable interest. The Australian Business Register describes a trust as an obligation on a person or entity, the trustee, to hold property for the benefit of others, with the trustee legally responsible for the operation of the trust. That is why the numbers work the way they do: the trust does not have an identity of its own, so its registrations are made by the trustee, in the trustee's own name, in the capacity of trustee. The result is that the three identifiers follow three different rules, and each rule turns on a different fact about your trust.

The three numbers at a glance

ACN: an identifier for companies only

An Australian Company Number is a nine-digit number that ASIC allocates to a company when it is incorporated. It identifies the company for the life of its registration. Under s 153 of the Corporations Act 2001 (Cth), a company must set out its name and its ACN on its public documents and negotiable instruments, unless the last nine digits of its ABN match its ACN, in which case the ABN can be used instead.

A trust cannot have an ACN, because an ACN is only ever allocated to a company and a trust is not a company. If your trust has an individual trustee, no ACN is involved anywhere. If your trust has a corporate trustee, the company that acts as trustee has its own ACN, and that ACN identifies the company, not the trust.

This is why you will see the letters ATF, meaning "as trustee for", on documents. When a corporate trustee signs a contract for a trust, the correct description is the company's name and ACN followed by the words "as trustee for" and the trust's name, for example "Burke Investments Pty Ltd (ACN 123 456 789) ATF The Burke Investment Trust". The ACN belongs to Burke Investments Pty Ltd. The trust itself has no ACN.

ABN: only when the trust carries on an enterprise

An Australian Business Number is an eleven-digit number that identifies an entity for its dealings with government and other businesses. Under s 8 of the A New Tax System (Australian Business Number) Act 1999 (Cth) (the ABN Act), an entity is entitled to an ABN if it is carrying on an enterprise in Australia. The Australian Business Register confirms that trusts carrying on an enterprise are entitled to an ABN.

The key question is whether the trust carries on an enterprise, which includes running a business such as a retail store, providing professional services, or leasing property. A trust that merely holds passive investments, such as a parcel of shares, is generally not carrying on an enterprise and is not entitled to an ABN.

Registration is not mandatory in the way that incorporation is for a company. A trust that carries on an enterprise is entitled to an ABN, and in practice it will almost always want one. The trust needs an ABN before it can register for GST, and businesses that deal with it will expect the ABN to appear on invoices. There is also a practical penalty for going without one: under the Taxation Administration Act 1953 (Cth), a business that pays a supplier for a supply and does not receive the supplier's ABN must withhold a significant proportion of the payment and remit it to the ATO. A trust that trades without an ABN can expect its customers to withhold money from its invoices.

The ATO's guidance on trusts registration and reporting obligations is explicit about how the registration works. The trustee registers for the trust's ABN in the trustee's capacity as trustee, and this registration is separate from any registration the trustee holds in other capacities, including acting in the trustee's own right. When the ABN is registered, the ATO automatically adds "The Trustee for" to the name of the trust, so the registration reads, for example, "John Smith, The Trustee for The Ellis Trading Trust".

TFN: the trust's own tax number

A trust should have its own tax file number, which the trustee uses when lodging the trust's tax returns. The ATO confirms that a TFN is registered in the trust's name, and that the trustee applies for it in the trustee's capacity as trustee. This is separate from the trustee's own TFN. An individual who is a trustee does not use their personal TFN for the trust's affairs, and a corporate trustee does not use the company's TFN either.

The trust keeps its TFN even when the trustee changes. Because the TFN belongs to the trust rather than to the person who happens to be acting as trustee, a new trustee simply continues to use the trust's existing TFN when lodging its returns.

The reason the trust needs its own TFN is that the trustee must lodge a trust tax return. According to the ATO, a trustee is required to lodge a trust tax return regardless of the amount of net income involved, unless the ATO advises that a return is not required. The TFN is quoted on that return, and the beneficiaries include their share of the trust's net income in their own tax returns using their own TFNs.

There is a withholding rule that makes the TFN practical rather than optional. Under s 12-175 of the Taxation Administration Act 1953 (Cth), the trustee of a closely held trust, which includes a family trust, must withhold tax from distributions to beneficiaries who have not provided their TFN to the trust. The amount withheld is significant, effectively the top marginal rate plus the Medicare levy, and the beneficiary claims the amount withheld as a credit when they lodge their own return. The regulations set thresholds below which the withholding does not apply, and a tax adviser can confirm the current rate and thresholds before a distribution is made. The practical point is that a beneficiary who quotes their TFN avoids the withholding altogether.

Working it out on your numbers

The rules produce a concrete answer once you know your trust's activity and turnover. Here are two common situations:

• Trading trust: A trading trust running a cafe expects its GST turnover for the year to be $90,000. Because the trust is carrying on an enterprise and its turnover exceeds the registration threshold of $75,000 set by reg 23-15.01 of the A New Tax System (Goods and Services Tax) Regulations 2019 (Cth), the trust is required to be registered for GST under s 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). To register for GST it first needs an ABN, which it is entitled to because it carries on an enterprise. The full set for this trust is: ABN, registered in the trustee's name as trustee; GST registration; and the trust's own TFN for lodging its annual return.
• Passive family trust: A family trust holds a portfolio of Australian shares and a term deposit, and nothing else. Passive holding of investments is generally not carrying on an enterprise, so the trust is not entitled to an ABN and is not required to register for GST. It still needs its own TFN, because the trustee lodges a trust tax return even where the net income is modest, unless the ATO advises a return is not required. This is the combination that surprises people: a trust can have no ABN and no ACN, yet still need its own TFN.

Edge cases and carve-outs

A few variations on the rules above change the picture:

• Passive investment trust: if the trust only holds shares or similar passive assets, it is generally not carrying on an enterprise, so there is no ABN entitlement and no GST registration. The trust's own TFN is still needed for its return.
• Corporate trustee: the company's own ACN, ABN and TFN are entirely separate from the trust's registrations. Use the company's ACN with ATF on contracts, and never quote the company's TFN on the trust's tax return.
• Non-profit trust: the GST registration threshold for a non-profit body is $150,000 rather than $75,000, under reg 23-15.02 of the GST Regulations.
• Below-threshold trading trust: a trust carrying on an enterprise with turnover under $75,000 is not required to register for GST, but it may choose to register voluntarily, and it remains entitled to an ABN so its customers do not withhold from its invoices.
• Suppliers without an ABN: under the Taxation Administration Act 1953 (Cth), a business that pays a supplier without a quoted ABN must withhold a significant proportion of the payment and remit it to the ATO, so the trust's ABN should be quoted on every invoice it issues.
• Closely held trust distributions: where a beneficiary has not quoted their TFN, the trustee must withhold tax from the distribution under s 12-175 of the Taxation Administration Act 1953 (Cth), subject to thresholds set by regulation.

When a lawyer or accountant should review your trust's registrations

Getting the identifiers right is a small part of a larger structure, and the choices made at setup affect everything that follows. A lawyer can help you decide whether the trustee should be an individual or a company, because an individual trustee is personally liable for the trust's debts while a corporate trustee confines that liability to the company. A lawyer can also check that the trust deed, the trustee, and the registrations all use consistent names and capacities, and that contracts are signed in the correct capacity with the correct ACN or ABN attached.

An accountant or tax adviser is the right person to confirm whether a particular activity amounts to carrying on an enterprise, whether GST registration is required or advisable at your turnover level, and the current withholding rate and thresholds that apply to distributions to beneficiaries who have not quoted a TFN. Where the trust trades, employs staff, or makes distributions to family members across different tax brackets, the interaction between the trust's registrations and the beneficiaries' own tax affairs is worth a structured review before the first return is lodged.

Registering the numbers in the wrong capacity

The single factor that decides whether your trust needs an ABN is whether it carries on an enterprise, and the mistake that costs the most is registering the numbers in the wrong name or capacity. An ABN or TFN registered to the trustee personally, rather than to the trustee in their capacity as trustee, is the trust's number in name only, and it will surface at the worst time, in a withheld payment, a rejected GST registration, or a return lodged under the wrong identity. Check the registered name on the Australian Business Register entry before you rely on it, and confirm the capacity with a professional before the trust starts trading.

To summarise: a trust never has an ACN, although its corporate trustee will have one; a trust is entitled to an ABN only if it carries on an enterprise, and needs one in practice if it trades or registers for GST, which becomes mandatory once GST turnover reaches $75,000 ($150,000 for non-profits); and a trust should have its own TFN, registered in the trustee's capacity as trustee, because the trustee must lodge a trust tax return regardless of the level of income. The trustee, not the trust, holds the pen, and getting the name and capacity right on each registration is the step that keeps the whole structure compliant.