12Trustees

12 Trustees

(1) The trustee of a *private ancillary fund must exercise the same degree of care, diligence and skill that a prudent individual would exercise in managing the affairs of others. (2) At all times, at least one of the individuals involved in the decision‑making of a *private ancillary fund must be a responsible person.

Note: This requirement is similar to (but less strict than) the requirement applying to public ancillary funds (see Bray v Federal Commissioner of Taxation (1978) 140 CLR 560).

(3) A responsible person must be an active director of the trustee and a member of any other controlling body of the fund. (4) The trustee, or any other controlling body of the fund, must not exercise any discretion or power while subsections (2) and (3) are not being complied with, except: (a) to appoint a new trustee; or (b) to protect the property of the fund; or (c) to deal with an urgent matter that cannot be postponed. (5) Subsections (2), (3) and (4) do not apply to a *private ancillary fund that has the public trustee of a State or Territory as its trustee. (6) An individual must not be a director of a trustee, or a member of any other controlling body of the fund, if the individual has been convicted of a taxation offence (within the meaning of Part III of the Act) that is an indictable offence. If an existing director or member is convicted of such an offence, the individual must cease to be a director within 1 month after the conviction. (7) A responsible person is an individual with a degree of responsibility to the Australian community as a whole, and includes an individual before whom a statutory declaration may be made.

Note: Generally, individuals who are accepted as having a degree of responsibility to the community as a whole are known to a broad section of the community because they perform a public function or they belong to a professional body which has a professional code of ethics and rules of conduct. Individuals who have received formal recognition from the Government for their services to the community (for example, an Order of Australia award) will also usually have the requisite degree of responsibility. For further information see Taxation Ruling TR 95/27 which can be viewed on the Australian Taxation Office’s website (http://www.ato.gov.au).

Note: Example: An individual before whom a statutory declaration may be made includes those who are licensed or registered to practise in a range of occupations such as a dentist, legal or medical practitioner; a nurse, a pharmacist, a bailiff, a bank officer or officer of a building society or credit union with 5 or more continuous years of service; a clerk of the court; a justice of the peace, a judge, a magistrate; a member of various professional associations including a member of Engineers Australia, a member of Chartered Secretaries Australia; a member of the various professional accounting associations in Australia; a marriage celebrant, mayors, town clerks and members of Parliament; a government employee with 5 or more years of continuous service; a teacher employed on a full‑time basis at a school or tertiary education institution.