Family Trust – Distribution Statements

  • Family Trust - Distribution Statements

  • $78 incl. GST

  • What is an Annual Family Trust Minute of Distribution

    The Trustee signs an Annual Family Trust Minute of Distribution. This is before the end of the financial year. It declares how Family Trust income is distributed for the current financial year.

    The minutes allow distributions to all the income categories. For example, you can stream income (such as net capital gains and franked distributions) to specific beneficiaries. Our minutes includes comprehensive notes. There is also our law firm letter signing off on the Minutes.

    Build and sign the Statement before the end of each financial year, otherwise, you pay extra tax.

Build an Annual Family Trust Minute of Distribution

The Trustee signs an Annual Family Trust Minute of Distribution. This is before the end of the financial year. It declares how Family Trust income is distributed for the current financial year.

The minutes allow distributions to all the income categories. For example, you can stream income (such as net capital gains and franked distributions) to specific beneficiaries. Our minutes includes comprehensive notes. There is also our law firm letter signing off on the Minutes.

What the ATO used to tell us was wrongAnnual Family Trust Minute

At one time the ATO said that you could sign the Minutes up to two months after the end of the financial year. However, that is not the law. It was never the law. Make sure these Minutes are signed before 30 June. Out of an abundance of caution email a signed copy of the Minutes to your Accountant.

Minutes signed after 30 June are ineffective – and always have been. That means the default beneficiaries become ‘presently entitled’ to the income and get taxed on it. Alternatively, if there is no ‘default beneficiary’ then the Trustee is taxed on the trust’s income, at the highest marginal rate (section 99A Income Tax Assessment Act 1936).

See Annual Family Trust Minutes for other financial years here.

Best practice for Minutes – the 3 rules

  1. Build the Minutes and print off
  2. Sign the Minutes prior to 30 June
  3. Email a copy of the signed Minutes to your Accountant with a cc to yourself

Sign Annual Family Trust Minute by the end of financial year?

Build and sign the Statement before the end of each financial year, otherwise, you pay extra tax.

Why are there Distribution Statements for each financial year?

Since 1994, as a tax lawyer, I have provided an Annual Family Trust Minute for each financial year. I attend a lot of ATO audits. My doctorate was in tax. The tax laws change. The ATO changes its mind. We prepare the Family Discretionary Trust Minute of Distribution that reflect those particular rules for each unique financial year.

If you wish to also prepare a Family Trust Distribution for another financial year then see the list here.

What do I get?

Build your document online by answering the questions. Put in your credit card details.  Within seconds, your Trust Distribution Statement appears on your computer and is emailed to you. It includes:

  • Distribution Minutes, compliant with the ATO’s rulings for that year
  • Our law firm’s letter of advice on our law firm’s letterhead, signed by one of our Partners – this is for your Accountant’s due diligence file.

I won’t know my Trust’s Income by 30 June

That is ok. We have drafted our Distribution Minutes to allow for this. The distribution is:

  1. to each person in the Minutes, this is increased or decreased depending on their individual taxable incomes (considering their personal income, if any, from all other sources)
  2. up to their next applicable tax rate (including Medicare), and
  3. so forth for each tax rate, up to the highest tax bracket
  4. and then the remainder after all the named beneficiaries reach their highest tax brackets (including Medicare) goes to the next list of people that you write in the Minutes.

Therefore, you don’t need to know the Trust’s income or the beneficiaries’ final income for the year.

Once you have built the document, there is a section for you to hand write the beneficiaries in.

Why is it better to prepare my legal document on a law firm’s website?

You are dealing directly with a law firm’s website, therefore you:

  • benefit directly from the law firm’s PI insurance
  • retain legal professional privilege, and
  • receive legal advice from us.

You are supported by our 100% money back guarantee on the document you build.

How do I build the Family Trust Distribution Statement?

  • Answer the questions on our website.
  • Read the Summary page.
  • Lock and Build your document.
  • Type in your Credit Card details.
  • We email the Minutes, our covering letter and Tax Invoice to you.
  • Print and sign the Minutes.

Do I hand a copy of the Annual Family Trust Minute to the ATO?

The Australian Taxation Office (ATO) does not require and does not want to see your Distribution Statement. The ATO assumes you have complied with the law. The law requires that you have signed your Family Trust Distribution Statement before the end of the financial year. It is always open for the ATO to request a copy or the original of the duly signed Family Trust Distribution Statement. Make sure you have it. Make sure your Accountant also has a copy.

Can a beneficiary disclaim their entitlement to Family Trust income?

Update the Family Trust for Bamford streaming only:

legal consolidated

Or, update Bamford streaming PLUS update the rest of the Deed:

Or update for Bamford streaming PLUS the Deed PLUS update the Appointor & Trustee:

Or just update the Trustee:

Or just update the Appointor:


To set up a new Family Trust Deed:

To prepare the Annual Trust Distribution Minutes:


To deal with Division 7A (loan or UPE from your company to the Family Trust):

Or, to forgive the ‘loan account’ and UPEs (loans from humans to Family Trust):


Change the name of your Family Trust:

To wind up and vest the Family Trust, when you no longer want it:


Telephone us for legal advice on building this document.

Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJDFamily Trust Distribution Statement
Legal Consolidated Barristers and Solicitors
National Australian law firm

Toll free: 1800 141 612
Mobile: 0477 796 959
Email: [email protected]
Skype: brettkennethdavies


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Build a Family Trust Distribution Statement on a law firm’s website

Each financial year your Family Trust gets an income. It may be from passively renting out property. It may be from operating your business. Someone has to pay tax on that income. Every year you get the choice of which beneficiary pays tax on the income. Perhaps your son is on maternity leave. His marginal tax rate is low, so you may wish to distribute a big income to your son that year. In the following year, he may be back at work and earning a good salary. In that case, you don’t distribute any income to him from the Family *Trust. Perhaps your 18-year-old grandchild is now at a high school and not earning any money. In that case, you distribute to that grandchild using up their low marginal tax rate.Family Trust Distribution Statement The beneficiaries that you distribute to never actually get any money. You are just using up their low marginal tax rates. (The money owed to beneficiaries are called Loan Accounts or Unpaid Present Entitlements. Each year the children or beneficiaries sign a Debt Forgiveness Agreement to reduce the money the Family Trust owes them to zero.)

Complies with:

* the decision of the Full Federal Court in the Thomas case, which concerned the effect of a Supreme Court order relating to the purported distribution of franking credits separately from the dividends;

*  issues that arise out of a power of amendment conferred by a discretionary trust deed, including the extension of the vesting date

* the ATO’s view of how an amount included in a beneficiary’s assessable income under section 99B ITAA97 is treated where the amount had its origin in a capital gain from non-taxable Australian property of a foreign trust

* the ATO’s taxpayer alert for arrangements designed to exploit the proportionate approach to the taxation of trust income

13 point checklist

As per the Minutes you are currently building, the Trustee gives consideration to the following before making a distribution:

1. Does the trust deed require the distribution decision for an income year to be effected by a particular time and, if so, what is that time? (To be effective in creating a present entitlement, the distribution minute is made by 30 June (or such earlier time as required by the trust deed). Amend the Family Trust Deed if it requires a distribution minute after 30 June.) 2. Does the trust deed require the consent or approval of some person to a distribution of income, either generally or in particular circumstances? (Usually, it is the Guardian who consents.) 3. Has any distribution of income for the current income year already been made earlier in the income year? (If so, the distribution should be considered when drafting the final distribution minute. 4. Has a ‘family trust election’ been made? (In which case your class of beneficiaries who you can distribute to is extremely limited) 5. Are there any special income tax or CGT considerations that would mean that a distribution should or should not be made? (Consider:

• the CGT small business concession provisions • the trust loss provisions and, in particular, the pattern of distributions test • children with unstable marriages and defacto relationships

6. Does the trust deed permit the accumulation of income? (There can be tax advantages in not distributing certain income.) 7. Does the trust deed permit the characterisation of the otherwise revenue or capital nature of an amount? (If not update the Family Trust Deed to allow for the new rulings on Bamford’s case. 8. Is there a distribution to a company? (Build Division 7A Loan Deeds at www.legalconsolidated.com.au.) 9. What are the sources of the ordinary income and statutory income derived by the trust during the income year? (Is it better for different kinds of income or amounts (e.g. franked dividends or a capital gain) to be ‘streamed’?) 10. If a distribution is to be made to an exempt entity that is a beneficiary (charity), the anti-avoidance rule must be taken into account, as well as the fact that an exempt entity beneficiary is taken not to be presently entitled to the extent that, within two months after the end of the income year, it has neither been notified of its present entitlement nor has been paid its present entitlement. 11. If an asset is to be distributed in specie, does the distribution results in a CGT event? (Determine what the CGT consequences are. Consider trading stock or a depreciating asset. Is the beneficiary registered for GST for GSTD 2009/1.) 12. If the trust carried on a business of primary production, is it necessary to distribute income to ensure that a beneficiary is taken to carry on the business of primary production? 13. What are the TFN withholding rules for each beneficiary?

Sign Family Trust Distribution Statement by the end of financial year?

Build and sign your Family Trust Distribution Statements before the end of each financial year. It is not effective if it is signed after 30 June for that financial year.
Are you an accountant, financial planner or lawyer doing bulk Trust Minutes? Telephone my lawyers to get a discount voucher on 1800 141 612. Dr Brett Davies, Taxation Partner, Legal Consolidated Barristers & Solicitors

But I won’t know the income of my family trust until after 30 June

The ATO has stated that:

‘your resolution does not need to specify an actual dollar amount for the resolution to be effective in making a beneficiary presently entitled…’ (Trustees Resolutions QC 25912).

The Resolution you are building states that a beneficiary gets the income up to their marginal tax rate, and then to someone else up to their marginal tax rate. As the ATO states:

‘A resolution is effective if it prescribes a clear methodology for calculating the entitlement …’

Why build Distributions Statements for each financial year?

Since 1994, as a tax lawyer, I have provided a Family Trust Distribution Statement for each financial year. I attend a lot of ATO audits. My doctorate was in tax. The tax laws change. The ATO changes its mind. We prepare the Distribution Statements that reflect those particular rules for each unique financial year.

Does a resolution have to be in writing?

Read your Trust Deed to find out. Do you have a Brett Davies Lawyers or Legal Consolidated Family Trusts Deed? All our Deeds allows for the Distribution Minute to be in writing or oral. Whether the resolution must be recorded in writing depends on your trust deed. However, a written record provides better evidence of the resolution and avoids a later dispute. You don’t want fights with the beneficiaries and the ATO. A written record is essential to stream capital gains and franked distributions. A beneficiary is specifically entitled to franked dividends or capital gains if this entitlement is recorded in writing.

Telephone us for legal advice on building this document.

Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJDFamily Trust Distribution Statement Legal Consolidated Barristers and Solicitors National Australian law firm

National: 1800 141 612 Mobile: 0477 796 959 Email: [email protected] Skype: brettkennethdavies


30/09/2016

Family Trust – Distribution Statements

Build an Annual Family Trust Minute of Distribution The Trustee signs an Annual Family Trust Minute of Distribution. This is before the end of the financial year. It declares how Family Trust income is distributed for the current financial year. The minutes allow distributions to all the income categories. For […]