A bare trustee acts on the instructions of the beneficiary.

Even in circumstances where a trustee holds the legal title to trust property on trust for a beneficiary, the trustee  is still acting on behalf of and as directed by the beneficiary. This means that under the GST Act, the beneficiary, as opposed to the trustee, has the obligations in regards to supply or acquisition.  The 2008/3 GST Ruling extends this to a taxable supply in circumstances where a trustee, as directed by the beneficiary, transfers legal title to a third party. As the beneficiary is causing the supply to be made during the course of its enterprise, the beneficiary is responsible for GST.

Notwithstanding this analysis of liability for payment of GST the trustee of a bare trust can satisfy tax invoice requirements relating to supply or acquisition in the course of an enterprise because the trustee is acting on behalf of the beneficiary.  The trustee can also be the contracting party on behalf of the supplier where a supplier and recipient agree to apply the margin scheme or that a supply is a going concern, but it is the beneficiary and not the trustee carrying on the enterprise for the purposes of the taxable supply.

The Ruling also identifies the beneficiary as "carrying on a business" notwithstanding that that legal title to the assets of an enterprise be held by the entity carrying on the enterprise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.