Is Your Discretionary Trust 30 June-Ready?

Do you have a discretionary (non-fixed) trust for business or investment purposes?

If so, there are some important updates you need to be aware of. The ATO has tightened the rules around how trust income must be distributed, and failing to follow these requirements correctly could cost you up to 47% in tax.

What You Need to Know

To comply with ATO requirements, a Trust Distribution Resolution must be prepared and signed before 30 June each year. This document determines which beneficiaries such as yourself, your spouse, children, or even a related company will receive trust income for the financial year.

The resolution must:

Be signed before 30 June
Be properly worded in line with trust law and your Trust Deed
Prove that a valid decision was made prior to year-end

If it isn’t prepared in time or is not compliant, the default ATO position may apply, resulting in trust income being taxed at the top marginal tax rate (currently 47%).

The Challenge

Trust income isn’t always finalised before 30 June, making it tricky to allocate distributions. To work around this, we recommend conducting Tax Planning or at least a Trust Distribution Estimate in May or early June.

This allows us to:

Review your trust’s likely income
Prepare a compliant resolution in advance
Allocate income either:
- Proportionally to beneficiaries (e.g. 30% to A, 55% to B, 15% to C)
- In fixed amounts with a balancing amount (e.g. $20,000 to A, $15,000 to B, balance to C)

How We Can Help

At Total Business Partners, we offer two flexible options to assist with your trust distribution planning:

Tax Planning
A detailed review to minimise your overall tax and plan for the year ahead.
Trust Distribution Estimate
A high-level calculation to guide your trust resolution based on estimated income.

Act Now – Time is Limited

To avoid unnecessary tax and ensure your trust resolution is in place well before 30 June, get in touch with our team today. We’ll help you stay compliant, save on tax, and keep your financial affairs running smoothly.