Trustee Obligations for Family Trusts: What You Need to Know

If you’re the trustee of a family trust or discretionary trust in Australia, it’s important to stay on top of your annual responsibilities—some of which must be completed before 30 June, and others shortly after.

These aren’t just administrative tasks. Missing key deadlines or applying the rules incorrectly can expose your trust to significant tax risks, including the ATO taxing income at the top marginal rate of 47%.

Here’s what trustees need to do each year to stay compliant, protect beneficiaries, and avoid unwelcome surprises.

1. Income Distribution Resolution (due by 30 June)

Each year, trustees are required to decide how the trust’s income will be distributed—or retained—before the end of the financial year.

This decision must be documented in an income distribution resolution that complies with the trust deed. If it’s missed or not done properly, the ATO can tax the entire income of the trust in the hands of the trustee at the top marginal tax rate of 47%.

We’ve unpacked this further in a dedicated post on how trust income distribution resolutions work and why they matter.

2. TFN Reporting (due by 31 July)

Trustees of resident closely held trusts must lodge an Annual Trustee Payment Report by 31 July, listing each resident beneficiary who received a distribution during the year.

If not lodged, trustees may be required to withhold tax at 47% from future trust distributions.

There are exemptions if the trust has a valid Family Trust Election (FTE) or Interposed Entity Election (IEE) in place.

3. Section 100A – Allocation of Trust Income

The ATO’s recent guidance under Section 100A restricts income distributions where the benefit doesn't genuinely pass to the nominated beneficiary—especially in family group scenarios involving adult children or related entities.

If a distribution is deemed a “reimbursement agreement,” the ATO can disregard it and apply tax to the trustee at 47%.

This area is complex and evolving. Each year, it’s essential to consider whether your trust’s distribution approach remains compliant.

4. Division 7A – Unpaid Entitlements to Companies

If your trust distributes income to a corporate beneficiary but doesn’t pay the amount out in full, it becomes an Unpaid Present Entitlement (UPE).

If the UPE isn’t dealt with correctly—either paid or placed under a complying loan agreement—the ATO may treat it as a deemed dividend under Division 7A, resulting in tax consequences for the company.

This needs to be addressed by the time the trust lodges its next tax return to avoid exposure.

Proactive Compliance = Better Outcomes

Trust compliance isn’t something to leave until the end of June—or worse, after key deadlines have passed.

At WakPac, we help trustees stay one step ahead by:

• Reviewing trust deeds and confirming relevant obligations
• Preparing compliant income distribution resolutions
• Advising on Section 100A risk and distribution strategy
• Managing UPEs and avoiding Division 7A issues
• Ensuring all reporting and documentation is completed accurately and on time

The earlier we start, the more flexibility and tax-saving opportunities you’ll have.

Ready to get your trust obligations in order?

Annual trust responsibilities aren’t limited to a single form or deadline—and the consequences of missing something can be significant.

Need guidance? We’re here to simplify the process, help you stay compliant, and make sure you get the best result for your family group—get in touch now!

Looking for more detail on distribution resolutions specifically? Read our in-depth blog here.