Trust Distribution Resolutions: Why 30 June Matters

General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.

Trust distribution resolutions determine who is presently entitled to trust income at the end of the income year. That present entitlement drives who is assessed on the trust’s net income under Division 6 of the ITAA 1936.

The core rule at 30 June

Under the tax law, beneficiaries who are presently entitled to trust income at year end are assessed on their share of the trust’s net income. If no beneficiary is presently entitled, the trustee can be assessed under the trustee assessment provisions. In practice, this means the distribution decision must be made by the end of 30 June to set present entitlement for that year.

Evidence of a resolution

The ATO accepts that if a resolution is validly made by 30 June, records created after 30 June can be accepted as evidence of the decision. The key is that the decision itself must be made by 30 June, and the records must show that.

If no one is presently entitled

Where there is trust income to which no beneficiary is presently entitled, the trustee may be assessed on that income under section 99 or 99A of the ITAA 1936.

Practical checklist (plain English)

• Confirm the trust deed’s definition of income and who can benefit.
• Decide distributions before 30 June and document the decision.
• Ensure the resolution is clear on percentages or amounts and the income types.
• Keep contemporaneous evidence (minutes, signed notes, trustee resolution).

Key takeaways

• Present entitlement at 30 June determines who is taxed on trust income.
• The ATO can accept later records as evidence, but the decision must exist by 30 June.
• If no beneficiary is presently entitled, the trustee may be assessed instead.

Sources

• Income Tax Assessment Act 1936, Division 6 (sections 95A-99A)
• ATO trust distribution resolution evidence guidance