For tax administration, the Australian Taxation Office (ATO) describes a trust as a relationship rather than a legal entity and a company as a separate legal entity; a recommendation on which structure is more suitable is not stated on the official page. A trust carrying on an enterprise must apply for an ABN and register for GST when annual GST turnover is $75,000 or more, or $150,000 or more for a not-for-profit organisation (Australian Taxation Office, checked 2026-10-01). A company must lodge an annual company tax return and usually pays income tax through PAYG instalments, while beneficiaries generally pay tax on net trust income distributed to them (ATO, checked 2026-10-01).
What is the difference between a trust and a company?
A trust is an obligation for a person or other entity to hold property for beneficiaries. Although it is a relationship rather than a legal entity, the ATO treats it as a taxpayer entity for tax administration. A trustee manages its tax affairs and can be an individual or a company.
A company is a separate legal entity. Its income and assets belong to the company rather than its shareholders, its directors run it, and its shareholders own it.
Source: Australian Taxation Office, checked 2026-10-01.
What is on a trustee’s tax checklist?
- Use the trust’s own TFN. A trust should have its own tax file number, which the trustee uses to lodge the trust’s tax return. The trustee registers in that capacity, separately from any registration held personally or in another capacity.
- Apply for an ABN when carrying on an enterprise. The ATO says a trust carrying on a business must apply for an ABN and use it for its business activities. When the ABN is registered, “The Trustee for...” is automatically added to the trust’s name because the trustee is responsible for the trust’s tax obligations.
- Lodge an annual trust tax return. The return must include a statement showing how the trust’s income was distributed.
- Register for GST at the applicable threshold. Registration is required when annual GST turnover is $75,000 or more, or $150,000 or more for a not-for-profit organisation (Australian Taxation Office, checked 2026-10-01).
- Pay superannuation for eligible employees. The trustee must pay super for eligible employees, which may include the trustee if the trustee is employed by the trust.
Source: Australian Taxation Office, “Trusts registration and reporting obligations” and “Business structures - key tax obligations,” checked 2026-10-01.
What company tax duties matter to directors?
- Annual return: The company must lodge an annual company tax return.
- Company income tax: The company pays tax at its applicable company tax rate and usually pays through instalments under the PAYG system.
- Superannuation: The company must pay the super guarantee for eligible workers. The ATO says eligible company directors are included.
- Director penalties: Directors may, in some cases, be personally liable for certain tax and superannuation debts of the company under the director penalties rules.
- Dividends and franking credits: A company may distribute profits to shareholders through dividends and may be able to attach franking credits to those dividends.
Source: Australian Taxation Office, “Business structures - key tax obligations,” checked 2026-10-01.
Who pays tax on the trust’s income?
Who pays depends on how the trust income is distributed and who receives it.
| Trust income situation | Tax responsibility |
|---|---|
| Net income distributed to beneficiaries | Beneficiaries are generally responsible for paying tax on the net trust income distributed to them. |
| Income left undistributed | The trustee is liable to pay tax on the undistributed income. |
| Income allocated to certain beneficiaries | The trustee may be liable to pay tax on behalf of beneficiaries such as non-residents or minors. |
For comparison, a company pays tax on its income at the applicable company tax rate. Dividends and any attached franking credits concern the distribution of company profits to shareholders.
Source: Australian Taxation Office, checked 2026-10-01.
Sources
- Trusts, trustees and beneficiaries
- Trusts registration and reporting obligations
- Business structures - key tax obligations
Frequently asked questions
Is a trust a legal entity?
No. In legal terms, a trust is a relationship, not a legal entity. For tax administration, however, the ATO treats it as a taxpayer entity.
Can a company act as a trustee?
Yes. The ATO says a trustee can be an individual or a company.
Does the trustee use their own TFN for the trust return?
The trust should have its own TFN, which the trustee uses to lodge its tax return. The trustee registers for the trust in their trustee capacity, separately from any personal or other registration.
When must a trust register for GST?
A trust carrying on an enterprise must register when annual GST turnover is $75,000 or more. For a not-for-profit organisation, the threshold is $150,000 or more (Australian Taxation Office, checked 2026-10-01).
Does the ATO recommend a trust or a company?
The cited comparison lists their different obligations. A recommendation about which structure is more suitable is not stated on the official page.