Trust distribution resolutionJoshua Hoehne

Trust Distribution Resolution

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A missing trust distribution resolution can cost you a lot of extra tax. All just because of a missing piece of paper.

Trust Distribution Resolution

A trust doesn’t pay tax. The beneficiaries do. And if there are no beneficiaries, then the trustee pays the tax.

The problem is that the trustee pays tax at the top marginal tax rates (45%).  So never have the trustee pay the tax. But how?

You make sure that all trust income is distributed to beneficiaries on or before 30 June. And for that you need a trust distribution resolution before 30 June.

To help you with that, here is a sample text. Just copy and paste this trust distribution resolution – for a trust with a corporate trustee – and then adjust the details.

Quick disclaimer: We ain’t lawyers. So please just use this as food for thought and consult your lawyer.

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Minutes of Trustee Resolution

The directors of

SAMPLE PTY LTD
ACN 123 456 789
Acting as trustee of the
SAMPLE FAMILY TRUST
Established by Deed dated 1 July 2017

Being John Sample (Chair) and Joanne Sample
Present at the location and as of the date noted below

Resolved in favour that the trust income for the current financial year, if any, as determined by the trustee in accordance with the deed, be distributed as follows:

1 – JOHN SAMPLE To receive 50% of ordinary trust income and any capital gains and proceeds from any sale of capital gassets.

2 – JOANNE SAMPLE To receive 50% of ordinary trust income and any capital gains and proceeds from any sale of capital gassets as well as 100% of any residual trust income (if any).

The Chair instructed the Secretary to do all things necessary to give effect to the resolutions passed at the meeting. There being no further business the Chair declared the meeting closed.

Signed as a true and correct record on 30 June 2025 at 10 Sample Road SAMPLETOWN NSW 1234.

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And then you sign. That’s all. Do this on or before 30 June and it will save you a ton of tax each year.

 

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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

Liability limited by a scheme approved under Professional Standards Legislation.

 

Child Maintenance Trusts

Child Maintenance Trusts Save Tax

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Child maintenance trusts save tax but at what costs?

Child Maintenance Trusts

There are two reasons why child maintenance trusts are not that popular, even though they can save you a lot of tax.

Save Tax

Let’s say you pay $40k in child support for two children per year. If you earn more than $180k per year, this means that you need to earn $80k each year to pay $40k in tax and $40k in child support.

A child maintenance trust let’s you scrap those $40k in tax. So then you just pay the $40k in child support and no tax. And your two children don’t pay any tax either if this is their only income. So zero tax all the way through.

Sounds good, right? But …this tax saving comes at a huge cost. You lose two things:

1 – Loss of Capital

Let’s assume a 5% return. For the trust to earn $40k a year, you need to hand over $0.8m. These $0.8m are gone. Unlikely that you ever see that money again. They will go to your children at vesting. So you end up paying child support plus the $0.8m.

2 – Loss of Leverage

If you are the payer, you have one draw card to secure regular access to your children – apart from going to court: Regular payments.

By handing over all of the money in one go, you lose that leverage.

If you are denied access to your children, you could – in theory – retaliate by not paying out trust distributions, but then you don’t just have the other parent chasing you, You also have the ATO to deal with.

Trade Off

Despite all this, a child maintenance trust might work for you if you are certain that access to your children won’t be an issue.

You can trade a child maintenance trust against lower ongoing payments. So you negotiate lower child support payments and in return pay a certain amount into a child maintenance trust.

Summary

Child maintenance trusts are not that popular because you lose capital and leverage. But they might still work for you if you can reduce ongoing payments accordingly.

 

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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

Liability limited by a scheme approved under Professional Standards Legislation.