Prepare trust distribution resolutions
We prepare valid trustee resolutions to distribute trust income before 30 June.
Why do trust distribution resolutions need to be prepared carefully and on time?
A trustee of a discretionary trust must resolve how the trust’s net income for the year will be distributed to beneficiaries before 30 June for the distribution to be effective for that income year under the Income Tax Assessment Act 1997 (Cth). A resolution that is not made before the end of the income year, or that is defective or inconsistent with the trust deed, can result in the trust’s income being assessed to the trustee at the top marginal rate. The resolution must be consistent with the class of beneficiaries defined in the trust deed and must be expressed with sufficient certainty to be valid. Common errors include resolutions made after 30 June, resolutions that do not clearly identify the beneficiaries or amounts to be distributed, and resolutions that purport to distribute to persons who are not beneficiaries of the trust. We prepare trust distribution resolutions for trustees, advise on the allocation of income to beneficiaries, and ensure the documentation is consistent with the deed and effective for the income year.
What happens if a trust resolution is not made before 30 June?
If a trustee fails to make a valid resolution to distribute trust income before 30 June, the trust’s net income for that year is generally assessed to the trustee under the Income Tax Assessment Act 1997 (Cth), which typically means the income is taxed at the top marginal rate. Depending on the trust deed, it may not be possible to correct a late or missing resolution after the income year has ended. We advise trustees on the resolution requirements and prepare the documentation before the deadline so the distribution is effective.
Can a trust distribute income to any person, or only to named beneficiaries?
A trustee can only distribute trust income to persons who fall within the class of beneficiaries defined in the trust deed. A purported distribution to a person who is not a beneficiary of the trust is invalid and may be treated as a taxable amount assessed to the trustee under the Income Tax Assessment Act 1997 (Cth). We review the beneficiary class in the trust deed and advise on who can validly receive distributions before the resolution is made.
Can the trustee change how income has been distributed after the resolution is made?
Does the trust need to actually pay the distributed amount to the beneficiary by 30 June?
The resolution to distribute income needs to be made before 30 June, but the trust does not necessarily need to have paid the amount to the beneficiary by that date under the Income Tax Assessment Act 1997 (Cth). The income can be held on account for the beneficiary or recorded as a loan from the trust, but the tax obligations of the beneficiary for that year will be based on the amount resolved to be distributed. We advise on the practical implications of distributions that are resolved but not immediately paid.
Resolutions prepared before the 30 June deadline so the distribution is effective.
Distribution allocations reviewed against the trust deed before the resolution is made.
Documentation prepared correctly so the resolution withstands scrutiny.
A year of careful tax planning depends on a trustee resolution that is valid, correctly worded, and made before 30 June.
The most carefully designed trust distribution strategy fails if the trustee resolution is defective or made too late.
- We will review the trust deed and advise on the valid distribution options available for the income year.
- We will prepare the trustee resolution in accordance with the deed and ensure it is correctly worded and sufficiently certain.
- We will advise on the documentation requirements and ensure the resolution is executed before the 30 June deadline.
- We will advise on the tax implications of the proposed distribution allocations.
You have planned the year carefully and your accountant has a distribution strategy ready, but all of it depends on a resolution that is valid, complete, and made before 30 June.
A year of careful planning can all be undone by a trustee resolution that is defective or simply never made. If the distribution is not resolved correctly before the end of the income year, the income may be taxed at the top marginal rate regardless of the plan. It is one of the few situations in tax where a single missed deadline costs more than everything else combined.
What's included in your trust distribution resolution service
- Trust deed review for valid distribution options.
- Trustee resolution preparation and execution advice.
- Beneficiary class review and distribution allocation advice.
- 30 June deadline management.
- Tax implications of distribution allocations advice.
What goes wrong when trust distribution resolutions are not prepared properly?
Here is how we ensure your trust distribution resolution is valid and made on time.
Deed reviewed, resolution drafted, distribution executed before 30 June.
Review and advise.
We review the trust deed and advise on the valid distribution options for the income year.
Draft the resolution.
We prepare the trustee resolution in accordance with the deed, ensuring it is correctly worded and sufficiently certain.
Execute before the deadline.
We advise on execution and ensure the resolution is in place before 30 June so the distribution is effective for the income year.
Lawyers experienced in trust distribution resolutions, trust deed interpretation, and trustee obligations across Australia.
We understand you want to know the cost, before we get started.
We will map out our process, from beginning to end, so you know what the journey will look like before you get started.
We will provide you with a clear and detailed Work Proposal covering each step along the way.
Our fair fees are all-inclusive. No hidden costs for telephone calls, emails, photocopying, couriers, or coffee.
Our great lawyer guarantee
We want to be part of your team over the long term. We achieve this by adhering to these core principles:
Take the time
We listen carefully to understand what you want to achieve. Then we thoroughly explain our advice and step you through the documents. You can be sure you know the full consequences.
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We will pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.
Stick to our knitting
We only do what we're good at. You can be confident that we know what we're doing and don't pass on the cost of our learning.
Work as one team
Someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.
Fair pricing
For advice and documents, we provide a fixed or capped quote so you don't take price risk. If you're in a dispute, we map out the process and costs so you know what to expect.
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We're not in this for our egos. We're in it for a front row seat to witness your success.
