Trustee Resolutions: What To Do After 30 June

If you are a trustee and you make beneficiaries of a trust entitled to trust income by way of a resolution, it is important to make sure you are correctly complying with all the necessary requirements when making your trustee resolutions.

Will records created after 30 June be accepted as evidence of the making of the resolution by that date?

Yes. If trustee resolutions are validly made by 30 June, we will accept records created after 30 June as evidence of the making of a resolution by that date.

The following examples show the types of records and circumstances in which we will accept them.

Example: Individual trustee

On 29 June, an individual trustee writes a note, dated 29 June, stating that they have resolved to distribute the trust income in a certain way.

On 15 July, the trustee types the note reflecting the resolution of 29 June and provides a copy to the beneficiaries. We will accept the handwritten or typed notes as evidence of the making of the resolution on 29 June.

Example: Corporate trustee

The corporate trustees of a larger trust group map out where distributions are to be made, with appropriate percentages. This ‘map’ is signed by the relevant trustees on 26 June to evidence the resolutions that have been made.

On 25 July, the resolutions are recorded in the minute book maintained by the trustees. We will accept the signed ‘map’ or minutes book as evidence of the making of the resolutions on 26 June.

Do you have to prepare the trust accounts by 30 June to make beneficiaries presently entitled to trust income?

No. Trustee resolutions do not need to specify an actual dollar amount for the resolution to be effective in making a beneficiary presently entitled, unless the trust deed specifically requires it.

A resolution is effective if it prescribes a clear methodology for calculating the entitlement – for example, the entitlement can be expressed as a specified percentage of the income, whatever that turns out to be.

Alternatively, if you know that the income of the trust will be at least a certain amount, you may choose to make one or more beneficiaries presently entitled to the certain amount, and other beneficiaries entitled to the balance, whatever that turns out to be.

What happens if you make a resolution after 30 June?

If no beneficiary (including a default beneficiary) was presently entitled to trust income as at 30 June, you (the trustee) will be assessed on the trust’s taxable income at the highest marginal tax rate, plus the Medicare levy.