Trust Distribution Planning for Trustees
30 June Distribution Resolutions, Present Entitlement, Section 100A Integrity & Corporate Beneficiaries
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Why trust distributions need to be considered before 30 June
For many discretionary trusts, a valid trustee resolution is needed by the end of the income year to make one or more beneficiaries presently entitled to trust income. The ATO notes that the trust deed may require a resolution before 30 June, so the deed should be checked rather than assuming every trust has the same deadline.
End of Income Year Requirement
For many discretionary trusts, a valid trustee resolution is needed by the end of the income year to make one or more beneficiaries presently entitled to trust income.
The ATO notes that the trust deed may require a resolution before 30 June, so the deed should be checked rather than assuming every trust has the same deadline.
Trustee Assessed at Top Rates
If no beneficiary is presently entitled to trust income at year end, the tax outcome can be materially different and the trustee may be assessed on part or all of the trust's taxable income.
That is why trust distribution before 30 June is not simply a year-end bookkeeping entry made after the fact.
Not a Post-Year-End Bookkeeping Entry
If no beneficiary is presently entitled to trust income at year end, the tax outcome can be materially different and the trustee may be assessed on part or all of the trust's taxable income. That is why trust distribution before 30 June is not simply a year-end bookkeeping entry made after the fact.
What does trust distribution planning involve?
A practical distribution review brings together the trust's legal framework and its current-year accounting and tax information. Depending on the trust, the process may include:
reviewing the trust deed, beneficiary classes and any relevant default-beneficiary provisions
estimating trust accounting income and taxable income for the year
identifying beneficiaries who may be considered under the deed
reviewing beneficiary tax information and other relevant circumstances
considering capital gains, franked distributions and other income that may require specific treatment
checking prior-year unpaid entitlements or related-party balances that may affect the current decision
preparing or coordinating the accounting information needed for the trustee's resolution and year-end records.
Annual Trustee Support vs Strategic Tax Advisory
This page focuses on the annual distribution process and trustee decision support. For broader strategic tax planning around trust distributions, see our Trust Distribution Planning service under Tax Planning & Advisory. For detailed annual tax reporting of distributions, our Trust Tax Returns service covers the tax treatment and reporting side separately.
The trust deed comes first
A trustee cannot make a valid distribution simply because a tax outcome appears attractive. The trust deed determines the trustee's powers, the available beneficiary classes, how trust income is defined and what procedural requirements must be followed. A resolution that does not comply with the deed can create tax and legal problems.
Trustee Powers & Beneficiary Classes
The trust deed determines the trustee's powers, the available beneficiary classes, how trust income is defined and what procedural requirements must be followed.
Deed Compliance Over Tax Optics
A trustee cannot make a valid distribution simply because a tax outcome appears attractive. A resolution that does not comply with the deed can create tax and legal problems.
Accounting & Tax Review from Deed
Financially Up can work from the deed and relevant accounting records to identify tax and administration issues, supporting informed decision-making before deadlines.
Deed Records & Legal Adviser Coordination
Financially Up can work from the deed and relevant accounting records to identify tax and administration issues, but legal interpretation or amendment of the deed may require an appropriately qualified legal adviser.
Present entitlement and clear trustee resolutions
The ATO states that there is no single standard form of distribution resolution because trust deeds differ. What matters is that the resolution is effective under the deed and clearly identifies the beneficiary entitlement. A resolution does not always need to specify a final dollar amount if it provides a clear method for calculating the entitlement, although the deed may impose its own requirements.
No Single Standard Form
The ATO states that there is no single standard form of distribution resolution because trust deeds differ. What matters is that the resolution is effective under the deed and clearly identifies the beneficiary entitlement.
Calculation Methodology vs Fixed Dollar
A resolution does not always need to specify a final dollar amount if it provides a clear method for calculating the entitlement, although the deed may impose its own requirements.
Written Records & Streaming Timelines
Written records provide evidence of what the trustee decided and when. Franked distribution records are needed by the end of the income year; capital gain specific entitlements generally by 31 August (unless dealt with by 30 June or deed required).
Franked Distribution & Capital Gains Streaming Records
Written records are generally preferable because they provide evidence of what the trustee decided and when. For franked distributions, the record creating a beneficiary's specific entitlement generally needs to be made by the end of the income year. For capital gains, the specific-entitlement record generally needs to be made by 31 August after year end, although an earlier decision may be required where the gain forms part of trust income dealt with by 30 June or the deed requires it.
Tax issues that can affect a distribution decision
The lowest apparent tax rate is not the only issue. A trust distribution accountant may need to consider the character of the trust's income, beneficiary circumstances, losses, franking credits, capital gains, residency, trust elections, existing entitlements and related-party arrangements. Some of these matters have their own eligibility rules and should not be treated as automatic.
Beyond Lowest Apparent Tax Rates
The lowest apparent tax rate is not the only issue. A trust distribution accountant may need to consider the character of the trust's income, beneficiary circumstances, losses, franking credits, capital gains, residency, trust elections, existing entitlements and related-party arrangements.
Specific Eligibility Rules
Some of these matters have their own eligibility rules and should not be treated as automatic. Beneficiary circumstances and elections require careful cross-checking against current tax law.
Section 100A Reimbursement Agreements
Section 100A can also be relevant where a beneficiary is made entitled to trust income but an arrangement provides the economic benefit to another person in circumstances that fall within the reimbursement-agreement rules.
Fact-Specific Section 100A Assessment
The application of section 100A is fact-specific, so ordinary family arrangements should not be treated as automatically problematic, nor should every redirection of benefits be assumed acceptable. Each distribution must reflect the authentic economic benefit of the entitled beneficiary.
Company beneficiaries and unpaid entitlements
Where a private company is a beneficiary, unpaid entitlements and later use of the funds can raise additional trust and Division 7A issues. In Commissioner of Taxation v Bendel [2026] HCA 18, the High Court held that the unpaid present entitlements arising under the particular deed and resolutions before it were not loans under section 109D. The decision does not mean every trust-company balance falls outside Division 7A. The deed, the way the entitlement is created, any later financial accommodation and other transactions must still be considered on their facts.
Corporate Beneficiaries & UPEs
Where a private company is a beneficiary, unpaid entitlements and later use of the funds can raise additional trust and Division 7A issues.
High Court Bendel Decision Context
In Commissioner of Taxation v Bendel [2026] HCA 18, the High Court held that the unpaid present entitlements arising under the particular deed and resolutions before it were not loans under section 109D.
Deed Terms & Financial Accommodation
The decision does not mean every trust-company balance falls outside Division 7A. The deed, the way the entitlement is created, any later financial accommodation and other transactions must still be considered on their facts.
Private Company Related-Party Balances
If your trust has company beneficiaries or related-party balances, separate advice may be appropriate. Our Division 7A service addresses private-company Division 7A compliance in more detail.
Information to prepare for a distribution review
Useful information generally includes the current trust deed and amendments, year-to-date accounts, expected income and expenses to 30 June, capital gains or asset sales, dividend and franking information, beneficiary details, prior-year resolutions, unpaid entitlements and relevant trust elections. The more complete the information, the easier it is to identify issues before the resolution deadline rather than after year end.
current trust deed and amendments
year-to-date accounts
expected income and expenses to 30 June
capital gains or asset sales
dividend and franking information
beneficiary details
prior-year resolutions and unpaid entitlements
relevant trust elections
Identify Issues Before Deadlines
The more complete the information, the easier it is to identify issues before the resolution deadline rather than after year end. Collation in May and early June prevents rushed decisions and ensures proper documentation.
How Financially Up can help
Financially Up can prepare or review management figures, estimate the trust's year-end position, identify tax issues affecting potential distributions, coordinate the accounting information for the trustee's resolution, and ensure the final distribution records can be reconciled with the annual trust tax return. Where specialist legal or financial-product advice is required, that work is separately scoped.
Prepare & Review Management Figures
Financially Up can prepare or review management figures and estimate the trust's year-end position before 30 June.
Identify Tax Issues & Coordinate Resolutions
Identify tax issues affecting potential distributions and coordinate the accounting information for the trustee's resolution.
Tax Return Reconciliation
Ensure the final distribution records can be reconciled with the annual trust tax return. Where specialist legal or financial-product advice is required, that work is separately scoped.
Annual Preparation & Lodgement Work
After year end, the actual accounts and tax return need to reflect the trustee's valid resolution and the trust's final income. Our Trust Tax Returns service covers the annual preparation and lodgement work.
Why choose Financially Up?
Financially Up Pty Ltd is a registered tax agent with more than 10 years of experience across tax, accounting, bookkeeping and business advisory services. Our team includes CPA and IPA members. We work with clients Australia-wide through online appointments, with in-person appointments also available. For distribution planning, the focus is on timely information, clear service boundaries and records that support the trustee's actual decision.
Registered Tax Agent #26242127
Licensed under the Tax Practitioners Board with deep expertise in discretionary trust taxation, present entitlement, and ATO resolutions.
CPA & IPA Members
More than 10 years of experience across tax, accounting, bookkeeping and business advisory services.
Australia-Wide Appointments
We work with clients Australia-wide through online appointments, with in-person appointments also available.
Timely Info & Trustee Records
For distribution planning, the focus is on timely information, clear service boundaries and records that support the trustee's actual decision.
Speak with a Trust Distribution Specialist
Review your expected accounting income, beneficiary entitlements, franking credits, and 30 June resolution minutes before year end. Call us at 1300 328 316 or schedule a consultation online.
Complementary Trust Governance & Tax Solutions
Connect your 30 June distribution resolutions with comprehensive trust accounting and corporate tax compliance.
Family Trust Accounting
Discretionary trust structures, annual distribution minutes, and 30 June resolution timing.
Corporate Trustee
Pty Ltd trustee establishment, ASIC annual review compliance, and perpetual asset isolation.
Trust Tax Returns
Annual trust income tax return lodgement, capital gains streaming, and beneficiary distribution schedules.
Division 7A Compliance
Managing private company corporate beneficiary unpaid present entitlements (UPEs) and complying loans.
Frequently Asked Questions About Trust Distribution Planning
Find fast answers to common questions about our individual tax lodgements, deductions, and CPA services.
It is sensible to begin before 30 June, particularly where the trust has significant income, capital gains, company beneficiaries, multiple family members or unusual transactions. The trust deed may require the trustee to act before 30 June, so the deed should be checked early.