Earlier this month we discussed the upcoming 2018 trust accounting reforms as outlined by NSW Fair Trading. Of significance in these reforms was the introduction of the need for a separate sales and rental trust account.
For those who already operate with separate accounts, you can pat yourself on the back, close this tab and grab a cup of tea, safe in the knowledge you will meet this compliance item. For those who aren’t so lucky and have the one trust account for sales and rentals, then we have compiled your to-do list. Follow these steps and you too will soon be kicking back happy in your compliant state.
Register the new trust account with OneGov
New legislation from 2015 requires all licensees to have UINs for all trust accounts. Once registered with OneGov, you will be issued with a Unique Identifying Number which you are required to give to your authorised deposit-taking institution (ie – your bank). If in doubt about how to go about this, check out our blog for detailed instructions on meeting new guidelines for trust accounts.
Yep, you read the order correctly
It does seem odd that you need to register the trust account before physically opening it. But it is correct. You will need to supply the registration number to your bank upon opening the trust account. You will also need to have the Unique Identification Number form stamped by the bank and retained in your audit file for compliance.
Open the trust account with your nominated provider
Before you make your final choice, it is always wise to check the list of Approved Deposit Taking Institutions as per the NSW Fair Trading website. The list can change and is updated regularly. Check your chosen bank is on the list. If not, you will need to switch banks with one on the list in order to open a new account.
Have hardcopy deposit and cheque books
As much as we love technology, we also love back-ups when technology fails us. Insist on a deposit book and trust cheque book for the new trust. As trust us (no pun intended) that there will be times you need to write out a hardcopy deposit or cheque. Don’t do away with the old just yet!
Ensure the account is set up correctly
Your new account must be set up as a proper statutory trust account NOT a business account. Ensure your business banker is fully across this distinguishing difference. The account name MUST contain the words “TRUST ACCOUNT”. For example, Tom Jones Pty Ltd T/as Jones Real Estate Trust Account. This is a requirement under the Property, Stock & Business Agents Act 2002. Additionally, your cheque book and deposit book (as you have duefully received as per the point above) must also display the same account name.
Get the stamp of approval
Don’t forget to get the OneGov form stamped by the bank.
Direct your fees accordingly
Ensure all fees relating to the new trust account are redirected to your general trading account.
Retain all Records
Retain all banking records on file for presenting to the auditor or Fair Trading when required.
That is the banking side complete. Once you have worked through these steps, the next plan of attack is to correctly enter these new trust account details into your trust accounting software. For those with existing software providers, you may need to upgrade your software to accommodate the additional trust account. For those not using trust accounting software (eeekkk!) we strongly advise that you do so! To get you started, we have the Top Questions to ask your New Trust Accounting Software Provider.
The new changes may seem annoying and costly to begin with. But they will have a positive effect in the long-term with clearer processes and transparency.
~ Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 20 years industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.