Family Discretionary Trusts: Navigating Section 100A & Resolution Deadlines
Discretionary Family Trusts provide asset protection and tax streaming flexibility. Learn about the 30 June resolution deadline and ATO Section 100A compliance rules.
Family Discretionary Trusts: Navigating Section 100A & Resolution Deadlines
Discretionary Family Trusts offer unparalleled flexibility for streaming capital gains and franked dividends while protecting family assets. However, heightened ATO scrutiny under Section 100A requires rigorous adherence to distribution timing and genuine beneficiary economic entitlement.
1. The 30 June Trustee Resolution Requirement
Trustees must execute written distribution resolutions on or before 30 June of each financial year. Failure to do so results in trust income being taxed at the highest individual marginal tax rate (47%) in the hands of the trustee.
2. Understanding ATO Section 100A Risks
Section 100A targets reimbursement agreements where trust income is distributed to a low-tax beneficiary (e.g., adult student child) but the economic benefit is retained by someone else (e.g., parents).
Key Takeaways for Taxpayers
- Always execute trust distribution minutes on or before 30 June.
- Ensure beneficiaries receive the actual financial benefit of distributions.
- Stream capital gains and franked dividends in accordance with trust deed powers.
Chloe Harrison
Principal Corporate Advisor • Chartered Accountant (CA), Tax Advisory Lead
Registered Australian tax agent and advisor helping individuals, sole traders, and companies navigate ATO compliance, deductions optimization, and wealth structuring.