Trust money is money you handle on behalf of someone else, under your appointment to act as an agent. You must pay trust money into a trust account.
Non-trust monies are amounts you receive that are unrelated to acting as an agent. Usually, non-trust money must be paid into a general account, but there are some circ*mstances where it can be paid into a trust account.
Non-trust money in a trust account
If you receive an amount consisting of both trust money and non-trust money, which cannot be practically divided, you must pay the whole amount to the trust account.
The portion that is non-trust money must be removed from the trust account within 14 days of the money becoming available.
It is important that you remove non-trust money as quickly as practicable. The quantity of non-trust monies in a trust account may increase the time and cost of an audit. By banking non-trust monies into a trust account, you also are denying yourself access to cash flow which belongs to your business.
Trust money might include payments for:
- rent
- sales deposits
- holiday accommodation
- utilities that aren’t already included in the rent
- advertising expenses
- property repairs you need to organise on behalf of your client
- bonds.
Non-trust money might include payments for goods or services such as:
- trips and tours
- restaurant meals
- room service
- equipment hire
- transport.
For example
A customer stays in rented holiday accommodation for a week. During their stay, the resident letting agent organises several meals, room service and a tour. At checkout, the customer pays for their accommodation, meals, room service and tour in one payment.
Payment for the holiday accommodation is trust money, but the meals, room service and tour are not.
The payment is made into the trust account. Once the payment clears, the agent can move the amount for meals, room service and tour into their general account.
Practical issues in operating a trust account
Sometimes, the legal requirements might present you with practical issues.
The following guidance should assist:
- Payments which are entirely trust monies, or a combination of trust and non-trust monies, must be banked to your trust account.
- Funds received for a matter related to a transaction (e.g. a guest charges a tour or meal to the room account) may be paid to your trust account. Any amount deposited into the trust account must be able to appear against a ledger for either an owner or guest.
- Funds received from a person who is not a guest or resident (and therefore not part of, or related to, a transaction) must be banked into your general business account.
- There is no requirement that non-trust monies only be disbursed after owners have been paid. Non-trust monies banked to a trust account may be legally transferred immediately to your general business account.
- Deposits for accommodation where the guest’s stay has not yet been allocated to a unit should be paid into, and may remain within, your trust account until the unit is allocated and the owner becomes entitled to it.
- You might lease a unit from a property owner and then sub-lease the unit to a guest. These schemes are sometimes referred to as ‘leasebacks’. In such situations, all monies received are non-trust monies and are payable directly to you. Amounts received for owners where you have offered a ‘rental guarantee’ may still be considered trust money.
You should put in place systems at the point of sale to determine payments that are entirely non-trust monies. They must be banked into your general business account.
There are substantial penalties for the misuse of trust monies—up to a $32,260 fine or 2 years imprisonment.
- Last updated:
- 1 July 2024
