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James S

Apr 24, 2024

Bare trustee is one of the individual trustees

in SMSF Technical Forum

For a LRBA property, if the bare trustee is one of the fund's individual trustees, e.g. Tom & Mary are the fund's trustees and Tom is the bare trustee for the LRBA property. Is it allowed?

My view is that each individual trustee is a trustee of the fund, so the bare trustee cannot be the same person of any of the fund's trustees? Or must the bare trustee be exactly same as the fund's trustees then not allowed? Any input is appreciated. Thanks

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Apr 28, 2024

Hi James

My view is that 1 of the individual trustees cannot be the sole trustee of a bare trust.

I have never seen a bare trust set up this way as per your query and if a SMSF wanted to do this they should be getting legal advice as to whether it can be done.

The reason I believe it cannot be done is that the trustee of the SMSF and the bare trust must be separate entities which would not be the case if 1 of the individual trustees acted as trustee of the bare trust.

The rules behind who the trustee of a bare trust can be is not covered by SIS so your query is a legal question.

If other forum members have a view please let the forum know.

Thanks

The Auditors Institute