If you have a discretionary family trust in Australia, one task must be completed every year before 30 June without fail: passing a trustee resolution to distribute trust income to beneficiaries. Miss this deadline and the consequences are severe — the ATO can tax the entire trust income at 47%. Here is everything you need to know about the trust distribution deadline, what the trustee resolution must contain, and how to do it correctly.
What Is the Trust Distribution Deadline?
For most discretionary trusts in Australia, the trustee must make a valid income distribution resolution on or before 30 June of each financial year. For FY 2025-26, this deadline is 30 June 2026.
Some trust deeds specify an earlier deadline — for example, some deeds require the resolution to be made before 31 May. Always check your specific trust deed. If your deed requires an earlier date, the 30 June ATO deadline is irrelevant — your deed's date is the binding deadline.
The resolution does not need to be lodged with any government agency. It must simply be recorded in a written document (the trustee resolution or distribution minute) signed by the trustee before the deadline.
What Happens If You Miss the Deadline?
This is where it gets painful. If no valid distribution resolution is made before the deadline:
Section 99A of the Income Tax Assessment Act 1936 applies. Under this section, the ATO treats the trustee as a "default taxpayer" for the undistributed trust income and taxes it at the top marginal rate — currently 47% (45% + 2% Medicare Levy).
Real dollar example: Trust net income: $200,000 No resolution made by 30 June
Without resolution: $200,000 × 47% = $94,000 tax With resolution (income split between two beneficiaries):
- Beneficiary 1 ($100,000): ~$27,717 tax
- Beneficiary 2 ($100,000): ~$27,717 tax
- Total: $55,434 tax
Tax saved by making the resolution: $38,566
This is a real, avoidable cost. Every dollar saved through timely trust distributions goes directly to the beneficiaries.
Note: Section 100A of ITAA 1936 also applies where distributions are made to a beneficiary under a "reimbursement arrangement" — where the economic benefit goes to someone other than the named beneficiary. The ATO has significantly increased scrutiny of Section 100A in recent years. Distributions must reflect genuine economic benefit to the named beneficiary.
What Is a Trustee Resolution / Distribution Minute?
A trustee resolution (also called a distribution minute or trust distribution minute) is a written document in which the trustee formally resolves how the trust's net income will be distributed to beneficiaries for the financial year.
The document must:
- Identify the trust by name
- Be signed by the trustee (or all trustees if more than one)
- Be dated before the deadline
- Specify the beneficiaries and their respective entitlements (by amount, percentage, or as "remainder")
- Reference the financial year to which it applies
The resolution does not need to be witnessed or notarised. It does not need to be lodged with any authority. But it must exist in writing and must be made before the deadline.
Who Needs to Do This Every Year?
Discretionary family trusts (the most common type for family businesses and investment structures): Yes — mandatory annually.
Fixed trusts and unit trusts: The distribution rules are different. Unit holders are entitled to trust income in proportion to their units. A formal distribution resolution may not be required in the same way — but check your trust deed.
Bare trusts: Generally different rules apply.
Self-managed super funds (SMSFs): Not trusts in the traditional sense for income distribution purposes.
If you have a discretionary family trust used for income splitting, business operations, or investment purposes, you almost certainly need to make this resolution every year.
How to Make a Valid Trust Distribution Before 30 June
Step 1: Calculate estimated net income. You do not need the exact figure — an estimate is sufficient. You are distributing the net income of the trust for the financial year. Your accountant can help with an estimate in May/June.
Step 2: Decide on the distribution. Allocate income to beneficiaries in proportions that minimise overall tax. Common strategies include distributing to lower-income family members, using the $18,200 tax-free threshold, and distributing to adult children or the corporate trustee in some cases. Get advice from a registered tax agent on optimal distribution strategies for your situation.
Step 3: Prepare the trustee resolution document. The document must name the trust, identify the trustee, specify the financial year, list each beneficiary and their entitlement, and be signed and dated.
Step 4: Sign and date the document. The trustee (or all trustees) must sign before 30 June. Date the document accurately — backdating a trustee resolution is fraudulent.
Step 5: Store it safely. Keep the signed resolution with your trust records. Your accountant will need it when preparing the trust tax return.
Can I Do It Without an Accountant?
Many trustees prepare the trustee resolution themselves using a template, without professional help. The resolution itself is a straightforward document — the legal language is well established and does not require legal expertise to replicate.
However, the strategic decision of who to distribute to and in what proportions can be complex. Tax minimisation through distributions requires analysis of each beneficiary's income, tax offsets, and potential Section 100A exposure. For simple family trusts with straightforward circumstances, DIY is reasonable. For more complex situations, get professional advice on the distribution strategy — even if you prepare the document yourself.
Use our Trust Distribution Minute Generator to create your trustee resolution document with the correct legal language, including Section 97 ITAA 1936 references, in under 5 minutes.
Common Mistakes to Avoid
Backdating the resolution: Do not do this. A resolution dated on 1 July that purports to be a 30 June resolution is fraudulent and will not protect you.
Distributing to ineligible beneficiaries: Distributions can only be made to persons named as beneficiaries in the trust deed (or a class of persons defined therein). Check your deed before distributing.
Ignoring Section 100A: Distributions that involve a "reimbursement arrangement" — where the named beneficiary does not receive the economic benefit — can be set aside by the ATO.
Not retaining the signed document: The ATO may request the signed trustee resolution during an audit. Keep it for at least 5 years.
FAQs
Can I amend a trust distribution resolution after 30 June? Generally no. Once the 30 June deadline has passed, you cannot make or amend a distribution resolution for that financial year. This makes it critical to act before the deadline.
What if my trust has no net income? If the trust has no taxable net income for the year (e.g. it made a loss), a distribution resolution may not be required as there is nothing to distribute. However, some trust deeds still require a resolution. Check your deed.
Does the distribution resolution need to specify exact dollar amounts? Not necessarily. Distributions can be specified as percentages, fixed amounts, or as "the remainder" after other distributions. As long as each beneficiary's entitlement can be determined from the resolution, it is valid.
Use our Trust Distribution Minute Generator to create your signed trustee resolution document before the 30 June deadline.
Disclaimer: This guide is for informational purposes only and does not constitute legal or tax advice. Trust law is complex and your specific circumstances may differ. Always consult a registered tax agent or solicitor for advice specific to your trust.