Important Steps for Family Trusts Leading Up to 30 June

“I have a family trust, what should I do prior to 30 June?”

In recent years, the requirements leading up to 30 June for a family trust have become increasingly important as the ATO continues to ensure that taxpayers comply with well-established trust law principles and with the requirements of the trust deed itself.

Every year before 30 June, family trusts need to:

• Define income according to the trust deed
• Determine the expected amount of such income for the financial year
• Articulate which beneficiaries are going to receive the expected income, and how much of the expected income they are going to receive

All these decisions need to be documented in a trust distribution minute, which is signed by the trustees prior to 30 June—or earlier if the trust deed requires. Once 30 June has passed, this distribution minute cannot be changed. This leads to a myriad of issues, including determining the expected taxable income of all the potential beneficiaries so that you can ensure the expected income of the trust lands in the hands of the lowest tax bracket beneficiaries.

This leads many clients to consider adult children, elderly parents, or even companies to achieve tax savings. The ATO has closely scrutinised distributions to these types of beneficiaries in recent times, and as a result, there has been a raft of case law and rulings providing clearer guidance on how the ATO is interpreting the law with respect to these distributions. Distributions to these beneficiaries are not impossible but do require careful planning and execution.

Our team will be in touch with all our family trust clients shortly to begin this process for 30 June 2025.

If you’d like to explore how strategic distributions could help reduce your family group’s tax liability, please contact us by clicking the button below. We’re here to guide you through the process.