The 30 June trust resolution is the single most important piece of paper a family trust produces each year. It decides who pays the tax on the trust's income. It's also the document the ATO reads first when it looks at a trust, alongside where the money actually went.
This guide covers what the resolution must do, the deadlines, what to put in it, how section 100A works in practice, and the records that make your position defensible. It's written for trustees and business owners, and for the accountant checking their work.
What is a trust distribution resolution?
It's the trustee's written decision, made under the powers in the trust deed, about which beneficiaries are entitled to the trust's income for the year and in what shares. Once a beneficiary is "presently entitled", they're taxed on their share of the trust's net income at their own rate, whether or not they've been paid.
If the trustee is a company, the directors make the resolution under the company's constitution and sign the minutes. If there are individual trustees, all of them usually need to agree.
When must the resolution be made?
| Deadline | What must be done |
|---|---|
| 30 June (or earlier if the deed says so) | Decide who is presently entitled to the trust's income for the year |
| 30 June | Record in writing any streaming of franked distributions to particular beneficiaries |
| 31 August (two months after year end) | Make beneficiaries specifically entitled to capital gains, by appointing capital, if the deed allows |
| As soon as practical after 30 June | Tell each beneficiary about their entitlement |
| Before the trust return is lodged | Prepare the accounts, confirm the resolution matches the deed, and work out each beneficiary's share |
| Over the following months | Pay out entitlements, or document the terms on which the trust keeps the money |
The ATO's trustee resolutions page confirms the timing. Two details matter:
- Whether it must be in writing depends on the deed. But a written record is far better evidence, and streaming must be recorded in writing.
- Records made after 30 June (typed minutes of a decision made on 28 June, for example) are accepted as evidence of a decision validly made by 30 June. A decision actually made in August is not.
What if no valid resolution is made?
If the resolution is missing or invalid, the trust deed's default clause usually decides who's entitled, often a named default beneficiary such as a parent. If nobody is presently entitled, the trustee is assessed on the net income, generally at 47%. Either outcome can cost far more than the fee for getting it right.
What should a trust resolution say?
There's no single template that works for every deed, and a resolution that ignores your deed's specific wording can fail. These are the elements a sound resolution normally covers:
- The trust and trustee, correctly named, and the date and place of the decision.
- The power being exercised, by reference to the clause in the deed.
- The definition of income the deed uses, and any election the trustee makes about it (some deeds let the trustee decide whether certain amounts are income or capital).
- Each beneficiary and their share, as percentages or as amounts with a clear residual. Fixed dollar amounts without a residual are risky when the final income is different from the estimate.
- A default for the balance, so nothing is left without a beneficiary.
- Any streaming of franked dividends (by 30 June) or capital gains (by 31 August).
- Confirmation that each beneficiary is eligible under the deed, and, if the trust has made a family trust election, inside the family group.
- A record of what the trustee considered about the beneficiaries' circumstances.
- Signatures of all trustees, or of the directors of the trustee company.
Why the definition of "income" matters
The tax law taxes each beneficiary on a share of the trust's net (taxable) income in the same proportion as their share of the trust's income worked out under the deed. When the deed's income and taxable income differ, for example because of a capital gain, a non-deductible expense or a depreciation difference, a beneficiary can end up taxed on far more than they actually receive. Deliberately engineering that mismatch is also one of the things that takes an arrangement out of the ATO's low-risk zone for section 100A. Many modern deeds deal with this by letting the trustee define income as equal to taxable income. Check yours.
What is section 100A?
Section 100A is an integrity rule in the tax law aimed at reimbursement agreements. It applies where:
- a beneficiary is made entitled to trust income, and
- that entitlement arises out of an agreement under which someone else gets the benefit (the money is paid to, or used for, another person), and
- someone involved had a purpose of reducing tax, and
- the agreement wasn't entered into in the course of an ordinary family or commercial dealing.
If it applies, the beneficiary is treated as never having been entitled, and the trustee is taxed on that income at the top rate, 47%. There's no time limit on the ATO amending an assessment for section 100A, which is why old arrangements still matter.
The ATO's view is set out in Taxation Ruling TR 2022/4, and its compliance approach in Practical Compliance Guideline PCG 2022/2. Its plain-English summary is on the section 100A reimbursement agreement page.
What is an "ordinary family or commercial dealing"?
The ATO reads this exception narrowly. In its view the question is whether the arrangement is explained by the family or commercial purposes it achieves. Supporting your family, paying for things a family normally pays for, and keeping money in the business for working capital can all be ordinary dealings. An arrangement that only makes sense because of the tax it saves isn't. Contextual facts, family circumstances and cultural practices can help show a dealing is ordinary.
Which distributions are low risk and which are high risk?
PCG 2022/2 sorts arrangements into zones:
- White zone: arrangements entered into in income years before 1 July 2014. The ATO generally won't devote compliance resources to them unless they're already under review.
- Green zone (low risk): arrangements the ATO won't look at beyond checking that they fit. For example, a beneficiary who actually receives the money and uses it for their own benefit.
- Red zone (high risk): arrangements the ATO will look at as a priority.
Here's how common patterns tend to fall. This is our summary, not a substitute for the guideline.
| Pattern | Typical risk |
|---|---|
| Adult child receives the distribution and spends it on their own living costs, study or investments | Low |
| Spouse receives the distribution and it's used for genuine family living costs | Generally low |
| Distribution retained in the trust as working capital for the trust's own business, where the beneficiary or their spouse controls the trust, on commercial terms | Generally low |
| Bucket company in the family group, entitlement paid out or kept on commercial terms | Generally low |
| Adult child's distribution paid into the parents' mortgage offset or used for the parents' expenses | High |
| Adult child's entitlement used to "reimburse" parents for costs of raising them before they turned 18 | High |
| Beneficiary gifts or lends the money back to the trust or another family member | High |
| Beneficiary taxed on much more than they're entitled to receive, by design | High |
| Distributions to a beneficiary with losses who sits outside the family group | High |
| Beneficiary isn't told about the entitlement, or doesn't lodge a return | Takes the arrangement out of the low-risk zone |
Distributing to an adult child is not wrong. Distributing to an adult child while the parents keep the money is where the risk lives.
Worked example
Hypothetical, 2026–27 resident rates, Medicare levy included.
A family trust has $90,000 of income. The parents both earn over $190,000. Their son, 22, is studying and has no other income.
- Option 1: all $90,000 to one parent, taxed at 47%: $42,300.
- Option 2: $45,000 to the son, $45,000 to a parent. The son pays about $4,595 after the low income tax offset; the parent pays $21,150. Total about $25,745.
Option 2 is legitimate if the son receives his $45,000 and uses it for himself: rent, study, savings, his own investments. If instead the $45,000 goes into the parents' offset account, section 100A could treat the son as never entitled, and the trustee would be taxed at 47% on that $45,000. That would cost $21,150 in tax plus interest and, potentially, penalties, which wipes out the saving and then some.
Do trustees have to consider beneficiaries before distributing?
Yes, under trust law, separate from tax. A trustee must give real and genuine consideration to the beneficiaries when exercising a discretion. In Owies v JJE Nominees (2022), the Victorian Court of Appeal found a trustee had failed to properly consider two adult beneficiaries when making years of distributions. The decisions were open to challenge and the trustee was removed.
In practice, before signing each year:
- identify the primary beneficiaries the deed contemplates
- note what you know about their circumstances and needs (and ask, if you don't know)
- record why the distribution is being made the way it is
A short file note is enough. It protects the trustee and helps show that the arrangement is an ordinary family dealing.
What other rules affect the resolution?
Children under 18
Distributions to minors are taxed at penalty rates on unearned income. On the ATO's latest published rates (2025–26): nil up to $416, 66% of the excess up to $1,307, then 45% of the whole amount. Small distributions up to the nil threshold can make sense; larger ones rarely do. Exceptions apply for income from a testamentary trust and certain other excepted trust income. See our guide to testamentary trusts.
Family trust elections
If the trust has made a family trust election, every distribution must go to someone inside the test individual's family group. Distributing outside it, including to a company or trust without an interposed entity election, triggers family trust distribution tax at 47%. The ATO says it may remit up to 80% of the interest charge where trustees review past distributions themselves, lodge the payment form and pay the tax, up to 31 December 2026. If you're not sure your trust has always stayed inside the family group, check now. Our family trust election agent works through the family group and any past exposure; your accountant reviews it and decides what to lodge.
Bucket companies and unpaid entitlements
On 10 June 2026 the High Court decided in Bendel that a bare unpaid entitlement owed by a trust to a company beneficiary is not a Division 7A loan. The ATO's decision impact statement accepts that if the company does nothing with its entitlement, no Division 7A loan arises. But Subdivision EA can still apply if the trust uses the money to pay or lend to the company's shareholders or their associates, and section 100A can still apply to the entitlement. Our bucket company guide explains the position.
The proposed 2028 trust tax
This is a Bill, not law. The Tax Reform No. 3 Bill 2026, introduced on 14 October 2026, proposes a 30% minimum tax on discretionary trusts from 1 July 2028. Nothing in it changes the 2026–27 or 2027–28 resolutions. Our guide to the discretionary trust tax changes tracks its progress.
What records should a trustee keep?
Insufficient documentation is one of the main triggers for section 100A reviews. Keep, for every year:
- The signed resolution or minutes, made by 30 June (and any capital gains appointment by 31 August)
- The trust deed and every variation, with evidence each beneficiary was eligible
- A note of what the trustee considered about the beneficiaries
- How and when each beneficiary was told of their entitlement
- Bank records showing each entitlement was paid, and to whose account
- For amounts kept in the trust: the agreed terms, and what the money was used for
- Loan agreements for any amounts lent to family members or related entities
- Evidence each beneficiary included their entitlement in their tax return
- Family trust and interposed entity elections, and the test individual's family group
Keep them for at least five years after the relevant return, and longer for anything that might be reviewed under section 100A, which has no time limit.
Mistakes we see
- Resolutions signed in August and backdated. A decision made after 30 June is not a valid income resolution.
- Distributions to people who aren't beneficiaries under the deed, often partners and in-laws.
- Fixed amounts with no residual, so part of the income has no beneficiary.
- Ignoring the deed's definition of income and taxing beneficiaries on income they never receive.
- Paper distributions to adult children while the parents keep the money.
- Copying last year's resolution without considering this year's circumstances.
- Distributing outside the family group after a family trust election.
- Never paying entitlements, so large balances build up for years with no terms.
How BPAG helps
Most of our business clients have a trust, so the 30 June resolution is routine work for us. From April each year we estimate the trust's income, talk to you about each beneficiary's circumstances, and model the options. Our trust distribution resolution agent drafts the resolution with the deed's powers, timing and risk flags checked. A qualified accountant reviews it and explains anything that needs a decision, and you sign it on your phone before 30 June. After year end we prepare the trust tax return and each beneficiary's statement so the figures line up across the family. For the bigger picture, see our 30 June 2027 checklist, our tax planning service, or our guide to family trusts.
Frequently asked questions
Can I make a trust resolution after 30 June?
Not for income. The decision about who is entitled to the year's income must be made by 30 June, or earlier if your deed requires. The ATO accepts written records prepared after 30 June as evidence of a decision genuinely made by then, but a resolution actually made after 30 June doesn't count. Capital gains can be dealt with by 31 August if the deed allows the trustee to appoint capital.
Does section 100A apply to distributions to my spouse?
It can, but distributions to a spouse who genuinely receives and uses the money, or where the money stays in a jointly used account for the family's living costs, are generally treated by the ATO as lower risk. The concern is where the spouse is a low-income beneficiary on paper and the money is actually used by the higher-income partner for their own purposes.
Does section 100A apply to testamentary trusts?
Yes. Section 100A applies to trusts generally, including testamentary trusts. The same questions arise: who was made entitled, who actually received the benefit, and was the arrangement an ordinary family or commercial dealing. Testamentary trusts have their own concessions for minors, but they don't switch off section 100A.
What happens if a beneficiary doesn't lodge a tax return?
The beneficiary is still taxed on their share, and the ATO may follow it up. It also takes the arrangement outside the ATO's low-risk section 100A zone. Make sure every beneficiary knows about their entitlement and includes it in their return.
Can a trust distribute to a beneficiary who lives overseas?
Yes, if the deed allows, but the trustee generally pays tax on a non-resident beneficiary's share at non-resident rates, and some income can't be passed on tax-free. Distributions to non-residents through interposed companies are one of the patterns the ATO looks at closely. Get advice before resolving to distribute offshore.
Do I need a new resolution if nothing has changed from last year?
Yes. A resolution is made for each income year. Some deeds allow a standing direction, but relying on last year's document without considering this year's circumstances is how trustees end up failing to give beneficiaries real consideration. Make, sign and file a fresh resolution every year.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.