Trust Distribution Resolution Template and Deadline

A trust resolution appoints the trust’s income to beneficiaries for an income year. Make the decision by the applicable year-end or earlier deed deadline. Use the template below after checking the deed powers, beneficiary classes and proposed use of each entitlement.

What a Trust Resolution Does

A trust distribution resolution makes the chosen beneficiaries presently entitled to trust income. That entitlement helps determine who is assessed on the trust’s net taxable income, even when the cash remains unpaid.

Trust income is the amount determined under the deed and trust law. Net income for tax is calculated under tax legislation. Expenses or capital items can produce different totals.

For a simple trust with no streaming adjustments, a beneficiary entitled to 25% of trust income generally includes 25% of net taxable income. If trust income is $80,000 and taxable income is $100,000, those amounts are $20,000 and $25,000 respectively. A dollar appointment therefore needs careful treatment when the totals differ.

An ineffective resolution can activate the deed’s default beneficiary clause. If nobody is presently entitled, the trustee can instead be assessed. The ATO’s trustee resolutions checklist explains why the deed and actual wording determine the result.

The Resolution Deadline and the Deed’s Timing Clause

The ATO requires discretionary trustees to make income appointments by the end of the relevant income year. A deed can require an earlier decision or a particular written form. Set the practice’s signing deadline from that deed before drafting.

For franked distributions, the specific entitlement must be recorded in writing by income-year end. For a standard Australian income year, capital-gain specific entitlements generally have a recording period ending two months after income-year end. That later period cannot reopen income already appointed to another beneficiary. Gains forming part of trust income often need treatment in the year-end resolution. See the ATO’s income and streaming deadlines.

A corporate trustee makes its decision through its directors under the company’s applicable decision-making rules. Confirm the meeting quorum or written-resolution requirements. Individual trustees generally act together unless the deed permits another method. A draft prepared by the accountant is not the trustee’s decision.

What the Resolution Must Say

The resolution must identify the trust and trustee, the actual decision date and the relevant income year. State the deed power used and identify every beneficiary by their exact legal identity.

Give each beneficiary a fixed amount, percentage or objectively calculable formula. Define the income pool to which that appointment applies. Specify streamed gains and franked distributions separately where the deed permits them, and account for any remaining income.

A formula can work before final accounts are available if the deed permits it and the entitlement is already determined. Wording such as “beneficiaries and amounts will be chosen later” leaves the decision unfinished. Check every recipient against the beneficiary class and exclusions using the trust deed checklist.

If a company’s entitlement remains unpaid, record its amount and legal character separately in the trust and company records. Identify who holds the funds and how they are used. An income appointment does not itself settle whether a separate trust or a loan exists.

The High Court’s 2026 corporate-beneficiary entitlement decision changes the assumption that leaving an entitlement unpaid necessarily creates a Division 7A loan. On the facts before it, the company’s inaction did not create a loan and the entitlements were held on separate trust. Examine the deed, actual dealings and other applicable integrity rules before choosing the accounting treatment.

Trust Distribution Resolution Template

Adapt this trustee resolution template to the client’s executed deed and variations. Replace every brace-delimited field with the client’s details and remove clauses that do not apply. Check each clause reference before the trustee signs. Obtain deed-specific legal drafting advice where a power, entitlement or execution requirement is unclear.

Trust Details

Trust: {full trust name from deed}
Trustee: {full legal identity and capacity of each trustee}
Income year: {relevant income year}
Decision date and time: {actual decision date and time}
Decision method: {valid meeting or written-resolution method}
Deed: {executed deed and relevant variations}

Recitals and Power Relied On

The trustee has considered the deed and its variations, the year’s
income estimate and the proposed beneficiaries’ entitlements.

The trustee exercises the income appointment power in clause
{verified clause reference}. Each recipient in the appointment
schedule is within the permitted beneficiary class and is not excluded.

Income Determination and Appointment

Income for this resolution means {the applicable deed income definition}.

If the deed permits a separate income determination, the trustee
exercises clause {verified determination power} and determines income
on the following basis: {complete permitted basis}.

The trustee appoints the income pool described in the attached
appointment schedule to its identified beneficiaries in the shares
stated there. Those beneficiaries are presently entitled to those shares.

The schedule defines the pool, every amount or percentage and the
recipient of any residue. It forms part of this resolution.

Streamed Capital Gains and Franked Distributions

Capital gains: {identify each gain, permitted beneficiary and financial
benefit appointed under the verified deed power, or state none}.

Franked distributions: {identify each distribution, permitted beneficiary
and financial benefit appointed under the verified deed power, or state none}.

The appointment schedule identifies amounts already dealt with here
so they are excluded from any remaining income pool.

Streaming needs an entitlement to the relevant financial benefit. An appointment of only the taxable discounted gain can omit capital needed for that benefit. State the full appointment under the deed, then reconcile its tax treatment separately.

Capital and Signatures

Capital appointment: {complete any separate capital appointment under
its verified power, or state that no capital appointment is made}.

Unpaid entitlements: {record any deed requirement to set aside or hold
an entitlement and its actual implementation, without inventing a loan}.

Decision adopted by: {trustees or directors participating under the
applicable decision-making rules}.

Signatures and signing dates: {required signers and their actual dates}.

Filled Fictional Family Trust Example

This invented example has three adult individual beneficiaries and one bucket company. Its fictional deed permits percentage appointments under clause 12. It defines income as ordinary accounting income under clause 8. All four recipients are permitted beneficiaries, and there are no gains or franked distributions to stream.

The illustrative trustee company’s directors resolve at a valid meeting two business days before the applicable deed deadline. They appoint the entire income for the 2026 income year under clauses 8 and 12 as follows.

Beneficiary role	Share of income	Entitlement if income is $100,000
Adult individual beneficiary A	20%	$20,000
Adult individual beneficiary B	20%	$20,000
Adult individual beneficiary C	10%	$10,000
Corporate beneficiary, the bucket company	50%	$50,000
Total	100%	$100,000

The resolution makes no separate capital appointment. The directors record their actual decision time and sign with their real signing dates. The company entitlement remains unpaid, with its treatment recorded under the fictional deed’s terms. Its use of funds receives a separate tax review.

The clause numbers belong only to this invented example. Copy the allocation method only after confirming the client’s own powers. If a family trust election applies, check the permitted family group for distributions. If another trust receives an entitlement, consider the separate trustee beneficiary reporting requirements.

Trustee Minutes and Records

Trustee minutes record how and when the distribution decision was made. Keep the complete resolution with them, including its appointment schedule and any separate streaming records.

Use this short trust minutes template for a meeting or an authorised written resolution.

Trust and trustee: {legal identities}
Meeting or written resolution: {valid method and location if applicable}
Decision date and time: {actual date and time}
Attendees or participating decision-makers: {identities and capacities}
Authority and quorum: {deed and company requirements satisfied}
Documents considered: {deed, variations and distribution working papers}
Decision: the attached distribution resolution and appointment schedule
were adopted in their recorded form.
Approval record: {votes, consent or other required adoption evidence}
Signed record: {required signers and actual signing dates}
Attachments: {complete resolution and schedules}

File the signed, dated copy with the deed records and retain a copy on the practice’s client record. Preserve creation dates and the emails or meeting records that show adoption. A document’s creation timestamp alone does not prove that the trustee made the decision.

Section 100A Risk

Section 100A can treat a beneficiary as not presently entitled when their entitlement comes from a tax-reducing reimbursement agreement benefiting someone else. The trustee can then face assessment under section 99A at the top marginal rate. A tax reduction purpose is part of the rule. Another person receiving a benefit does not establish section 100A by itself.

The ordinary family or commercial dealing exception depends on the arrangement’s facts and purposes. A family relationship alone does not establish the exception. The ATO’s section 100A ruling explains its interpretation.

The ATO’s practical compliance guideline uses white, green and red zones. White addresses specified older arrangements. Green covers listed low-risk scenarios. Red identifies arrangements attracting priority scrutiny.

These zones guide compliance activity and do not decide whether the law applies. An arrangement outside the listed zones still needs assessment on its facts.

Review distributions to adult children where the funds return to parents, particularly purported repayment of childhood expenses. Review a loss beneficiary outside the family group or a low-rate beneficiary whose entitlement benefits someone else. Retaining cash in the trust needs attention to the actual arrangement, even when the beneficiary reports income.

Record where each entitlement goes, who uses the money and the commercial or family purpose. Keep supporting bank movements and agreements. Raise a high-risk pattern with the principal before the trustee adopts the resolution. A well-signed document does not repair an adverse underlying arrangement.

Collecting What You Need Before the Deadline

Collect the deed and distribution information when the trust becomes a client. Request the complete executed deed, variations, last year’s resolution and a current beneficiary list. Collect beneficiary TFNs through the practice’s authorised secure method, never in the resolution or ordinary email. Ask for an income estimate and expected gains or franked distributions.

Work back from the earlier of the deed deadline and income-year end. This is a practice timetable, with dates assigned from the client’s actual deadline.

Time before the applicable deadline	Practice action	Required result
Eight weeks	Send the deed and beneficiary document request	Complete deed history and recipients identified
Six weeks	Remind the trustee about missing information	Gaps allocated to a staff owner
Four weeks	Prepare income estimates and proposed appointments	Income definition and tax differences reconciled
Two weeks	Send the draft for review and reminder	Deed powers and benefit arrangements checked
Five business days	Escalate unsigned or disputed resolutions	Trustee decision booked or unresolved issue raised
Two business days	Obtain adoption and signatures under the applicable rules	Completed resolution and contemporaneous adoption evidence

Use the accounting client onboarding checklist to collect these records when the client joins. In Tax Genie, the practice can build a guided form with document requests and automatic reminders. Request the deed history and distribution information there so year-end preparation starts with the documents already collected.

When the Resolution is Late or Missing

A missed income appointment deadline requires an assessment of the deed’s default clause and the facts of any earlier decision. The intended beneficiaries do not acquire entitlement merely because accounts later credit them with income.

Where a valid default clause creates present entitlement, the default beneficiaries can be assessed. Otherwise, ordinary discretionary-trust income can be assessed to the trustee under section 99A at the top marginal rate. The ATO legal database explains the distinction between sections 99 and 99A. Assess any applicable statutory exception on its own conditions.

A resolution cannot be backdated. A record prepared after year-end must show its actual preparation and signing dates. If the deed allowed a timely oral decision, later minutes can record that earlier event accurately. Keep independent evidence of who decided what and when. Later minutes cannot create a decision that never occurred.

Record the missed deadline, the deed clauses examined and the evidence of any earlier adoption. Tell the client who is entitled, the expected assessment consequences and what remains to be resolved. Obtain principal review before completing the return, then assign next year’s deed deadline and reminders to the client record.