Trust tax returns: distributions, deadlines and records

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Preparing a trust tax return starts with the deed, valid trustee decisions and reliable records—not simply choosing who should receive a tax distribution. This guide focuses on discretionary trusts. Unit trusts and deceased estates can require different treatment.

Who pays the tax?

Beneficiaries are generally assessed on their relevant share of trust net income. The trustee may instead be liable, including where income is undistributed or particular beneficiary rules apply. Moving cash is not the only factor determining who is assessed. Trust losses cannot simply be passed to beneficiaries to reduce their other income. See ATO business structures and trust tax obligations.

Make distribution decisions on time

For an ordinary 30 June income year, resolutions making beneficiaries presently entitled to trust income generally need to be made by 30 June, or earlier if the deed requires it. Check the complete deed and amendments, eligible beneficiaries, powers and any vesting provisions. The ATO’s trustee resolutions checklist explains these requirements.

Keep clear evidence of the decision and its timing. You cannot repair a missed decision by backdating a resolution. Capital gains and franked distributions have specific entitlement and written-record requirements; do not assume a general distribution automatically streams them correctly.

Check who actually benefits

Section 100A can require review where a beneficiary’s entitlement is connected with an agreement benefiting someone else and a tax-reduction purpose. Ordinary family or commercial dealings may be excepted, but being related does not automatically settle the issue. The ATO’s TR 2022/4 discusses the rule. Its interpretation is under review following a 2026 court decision, so obtain advice about the specific arrangement rather than relying on an old example.

Records to prepare for the trust return

• The signed trust deed, amendments and trustee details.
• Distribution resolutions and records showing when decisions were made.
• Bank statements, financial reports and income or expense evidence.
• Investment statements and capital transaction records.
• Beneficiary details, entitlement balances, payments and loans.
• Prior accounts, returns and any relevant elections.

Tell your accountant about unpaid entitlements, money retained by the trust, payments to another person, beneficiary changes and related-party arrangements. They need assessment on their own facts.

Plan before year end

Discuss distribution decisions before the relevant deadline, then reconcile the accounts, resolutions and beneficiary reporting. For work relating to the year ended 30 June 2026, provide the records of decisions actually made; do not create a false earlier date.

Stewart Private Accounting can discuss your trust accounting and taxation needs through our trust accounting and tax return service and tax planning. Contact our Perth team.

General information current at 2 October 2026. Trust deeds, tax rules and the facts of each arrangement must be considered together.