Most trust tax problems are decided before the return is prepared. They're decided on or before 30 June, when the trustee resolves who gets the income, or fails to. By the time the accountant sits down with the figures in October, the options have narrowed to recording what happened.
That's why our trust work starts with the deed and the resolution, not the return. This page explains the process, the rules that matter most in 2026–27, and what we need from you.
What does a trust tax return involve?
A trust tax return reports the trust's net income for the year and how it was distributed. The trust usually pays no tax itself; each beneficiary pays tax on their share at their own rate. The return is the formal record of that.
For a family (discretionary) trust, a full year's work looks like this:
| When | What happens |
|---|---|
| Before 30 June | Deed checked; profit estimated; distribution modelled across beneficiaries; resolution drafted and signed |
| By 31 August | Any resolution to stream capital gains to specific beneficiaries, if the deed allows |
| July to the due date | Financial statements and tax reconciliation; trust's net income calculated |
| With the return | Distribution statement showing each beneficiary's share of income, franking credits and capital gains |
| After lodgement | Beneficiary statements for their own returns; unpaid entitlements recorded and managed |
Unit trusts are simpler on distributions, because unitholders are entitled in proportion to their units, but they have their own issues, such as unit registers, landholder duty and whether the trust is a fixed trust for tax. Our unit trusts guide covers them.
Why must trust distribution resolutions be made by 30 June?
Because the tax law looks at who was presently entitled to the trust's income at the end of the income year. If nobody is, the trustee can be assessed on that income at the top marginal rate, 47% including the Medicare levy.
A valid resolution needs to:
- Follow the deed. The trustee can only do what the deed allows: the right date, form and beneficiaries, and the right definition of "income".
- Be made by 30 June (or earlier if the deed says so). Streaming franked dividends must also be done by 30 June. Streaming a capital gain can be done by 31 August, if no other beneficiary was already entitled to it.
- Show real consideration. Courts have said trustees must give real and genuine consideration to the beneficiaries they could benefit. A resolution signed without thought, or copied from last year, is weaker evidence.
- Be recorded. Signed minutes, dated, with the reasons. Our trust distribution resolution agent drafts the resolution with the deed's powers, timing and risk flags checked, and the accountant reviews it with you before the trustee signs.
What a missed resolution costs
Example: a family trust makes $180,000 of net income in 2026–27. The trustee forgets to resolve by 30 June and the deed has no default beneficiary clause.
| Outcome | Tax |
|---|---|
| No valid resolution: trustee taxed at 47% | About $84,600 |
| Valid resolution: $90,000 each to two adult beneficiaries with no other income, who receive and use the money themselves | About $19,320 each, $38,640 in total (2026–27 rates, including Medicare levy) |
That's a $46,000 difference from one missed signature. The second row is an illustration, not a recommendation: whether a distribution like that is appropriate depends on the deed, the family's circumstances and section 100A. Our full guide to trust distributions and section 100A goes through the detail.
How does section 100A affect trust distributions?
Section 100A is an integrity rule. If a beneficiary is made entitled to trust income but someone else gets the real benefit of it, under an arrangement that isn't an ordinary family or commercial dealing, the entitlement can be ignored and the trustee taxed at 47%. There is no time limit on amending assessments where it applies.
The ATO's ruling and practical guideline on section 100A sort arrangements into risk zones. In plain terms:
| Lower risk | Higher risk |
|---|---|
| An adult beneficiary is paid their entitlement and uses it for their own purposes | An adult child is distributed income but the money is kept by, or paid to, the parents |
| Entitlements are paid within two years and used by the beneficiary | Distributions to low-income beneficiaries that are then gifted back to the trust or its controllers |
| A company beneficiary in the family group retains funds on commercial terms | Circular arrangements where money comes back to the trust with no real benefit to the beneficiary |
| Clear records of what was paid, when, and what it was used for | Entitlements that are never paid and never intended to be |
We test every proposed distribution against these patterns before the resolution is signed, not after. The ATO has said it is reviewing some of its trust guidance following the High Court's 2026 Bendel decision, so we also confirm the current position each year.
Does your trust need a family trust election?
A family trust election (FTE) lets a trust access certain concessions, mainly the ability to use past losses more easily and to pass franking credits to beneficiaries without the holding period rule causing problems. The cost is that the trust's distributions should stay within the "family group" of a specified individual.
If an elected trust distributes outside that group, it pays family trust distribution tax at 47% on the amount, with no discretion for the ATO to waive it and no time limit on review. This catches people out when a distribution goes to a company or trust that hasn't made an interposed entity election, or to someone outside the family as defined.
Watch out: The ATO is offering to remit most of the interest on family trust distribution tax for trusts that review their own history, lodge the payment advice and pay the tax, up to 31 December 2026. If your trust has an election and you're not sure every distribution stayed in the group, now is the time to check.
Our family trust election agent works through elections, interposed entity elections and family trust distribution tax with the accountant. Our trust deed agent summarises your deed's powers, beneficiaries, appointor and vesting date so we can check them before each resolution.
When is a trust tax return due?
For 2025–26 trust returns lodged through us under the registered agent lodgment program:
| Trust | Lodge by |
|---|---|
| Prior-year returns outstanding at 30 June 2026 (if all are lodged) | 31 October 2026 |
| Latest return showed tax of $20,000 or more | 31 March 2027 |
| Large or medium trusts | 31 January 2027, or 28 February 2027 if non-taxable |
| Most other trusts | 15 May 2027 |
| Trusts with a 15 May date that pay any tax by this date | 5 June 2027 |
You need to be on our client list by 31 October 2026 for these dates to apply. Beneficiaries need the trust's figures before they can finish their own returns, so we prepare the trust first. Our compliance calendar has every other date.
What's changing for trusts?
- This is law: from 1 July 2027 the 50% CGT discount is replaced by cost-base indexation for gains accruing from that date, for individuals, trusts and partnerships. Assets held at 30 June 2027 keep the discount on growth to that date. See our guide to the 30 June 2027 tax changes.
- This is not law: the Tax Reform No. 3 Bill 2026 proposes a 30% minimum tax on discretionary trust income from 1 July 2028, collected from the trustee, plus rollover relief for families who restructure out of a discretionary trust. We model it for every trust client but won't recommend acting on a Bill. Our guide to the discretionary trust tax changes tracks it.
What mistakes do we see with trust returns?
- Resolutions made after 30 June, or by someone who isn't the trustee.
- Distributing to a beneficiary the deed doesn't name or to a class it doesn't include.
- Unpaid entitlements piling up year after year, never paid to the beneficiary.
- Distributions outside the family group of an elected trust.
- Trust "income" defined in the deed differently from tax net income, so the resolution allocates the wrong amount.
- Lost deeds or missing variations. If you can't find the deed, tell us early; a solicitor may need to help reconstruct it.
What does it cost?
Trust returns are quoted as a fixed fee, depending on the trust's activity. A family trust can sit alongside your company and personal returns under one engagement, signed once on your phone. See our pricing page, or, if you're thinking about setting up a trust, our family trust setup service.
Legal documents such as deed variations and changes of trustee or appointor are prepared by a solicitor; we brief them and work alongside them.
What should you send us?
- The trust deed and every deed of variation
- Last year's trust return, financial statements and resolution
- Details of the trustee (individuals or company) and the appointor
- Bank statements, investment statements and Xero access for trading trusts
- A list of beneficiaries you're considering, with their expected income for the year
- Records of payments made to beneficiaries and any unpaid entitlements
- A copy of any family trust or interposed entity election
"We have been working with Ray and the fantastic team at BPAG Accountants for several years, and it has truly been the best decision for our company… Their invaluable support has saved us a great deal of money and time." Susan McKendry, Google review
Frequently asked questions
Does a family trust have to lodge a tax return every year?
Yes. A trust with an active ABN, income or assets generally lodges a trust tax return every year, even if all the income is distributed and the trust itself pays no tax. The return reports the trust's net income and who it was distributed to, and beneficiaries then include their share in their own returns.
Can a trust resolution be made after 30 June?
For most trusts, no. Beneficiaries must be presently entitled to trust income by the end of 30 June, so the resolution has to be made by then, as the deed requires. Streaming a capital gain can be resolved up to 31 August if the deed allows and no one became entitled to it earlier. A resolution backdated after the fact is ineffective and can expose the trustee to tax at the top rate.
What does a trust tax return cost?
It depends on the trust's activity. A family trust holding a few investments costs less than one running a business with payroll and assets. We quote a fixed fee once we've seen the deed and last year's return, and trusts in a client's family group can be covered under one engagement.
Can a trust distribute to a company?
Yes, if the deed allows and the company is a beneficiary, and many groups use a bucket company to cap tax on retained profit. In 2026 the High Court held in Bendel that an unpaid distribution owed to a company is not by itself a Division 7A loan. Section 100A and other integrity rules still apply, and the company must be inside the family group if the trust has made a family trust election.
Do I need a corporate trustee?
Not legally, but it is usually better. A company as trustee separates the trust's liabilities from your personal assets, makes succession simpler when a person dies or leaves, and avoids retitling assets every time an individual trustee changes. It costs an ASIC fee each year and a little more administration.
Is the 30% minimum tax on trusts law?
No. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, introduced on 14 October 2026, proposes a 30% minimum tax on discretionary trust income from 1 July 2028. It is a Bill before Parliament and may change. Your 2025–26 and 2026–27 trust returns are prepared under current law.
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.