Trust Distribution Resolution

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.

—————————

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.

—————–

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.

 

NSW COVID-19 Support

Get the NSW COVID-19 support payments you need.

NSW Covid-19 Business Support

Times are tough. Lockdown starts to bite. The first couple of weeks were ok – we all thought it would be over quickly. But now things are really turning south. You need help – fast. The good news is that there is money to help you. Not much, but hopefully enough.

There are four support payments on the table. Business Grant – JobSaver – Micro-Business Grant – and – Disaster payment. 

Setting the scene

It is an either-or proposition. You have the Business Grant and JobSaver on one side if your business sales are over $75,000.

And then you have the Micro-Business Grant on the other side if your business sales are between $30,000 and $75,000.

The disaster payment is completely separate from all this and has nothing to do with your business. The disaster payment goes to you as an individual employee who lost work hours.

So if you are an employee of your company, then you might be able to double-dip. Your business might get the business grant and JobSaver while you as an employee might be able to qualify for the disaster payment.

If you are a sole trader, unfortunately, there is no double-dipping since it is all just you. So you go for either or.

NSW 2021 COVID-19 Business Grant

Covers the first three weeks of the lockdown from 26 June to 17 July 2021. It is a three-tiered payment of $7,500, $10,500 or $15,000 depending on whether your turnover dropped by 30%, 50% or 70%. Your annual turnover must be $75,000 or more. Applications close on 13 September 2021.

NSW 2021 COVID-19 JobSaver

Starts from week 4 of the lockdown, so from 18 July to the end whenever that will be. JobSaver pays at least $1,500 per week or 40% of your weekly payroll based on your March 2021 BAS if employing or $1,000 per week if non-employing. You must have had a 30% drop in sales and your annual sales must exceed $75,000. Applications close 18 October 2021.

NSW 2021 COVID-19 Micro-business Grant

Starts from week 1 to end of the lockdown and pays $1,500 per fortnight. You qualify if you had a 30% drop in sales and your annual sales must be between $30k to $75k. Applications close 18 October 2021.

Disaster Payments

Disaster payments have nothing to do with your business. They go to you as an individual employee. Payments started low but are now $450 and $750 if you lost less or more than 20 hours of work respectively. You apply through Centrelink.

Does that make sense? Please call me if you are not sure how to go from here.

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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

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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Reduce Child Support Payments

Working From Home Expenses

Tax When You Buy Overseas Shares

 

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.