Trust tax returns, resolutions and distributions

Who it is for

• Trustees of family and other discretionary trusts that hold investments or run a business
• Trustees of unit trusts and other fixed trusts held by business partners or investors
• Companies acting as corporate trustee, and their directors
• Executors and trustees of deceased estates and testamentary trusts
• Beneficiaries who need their trust distribution reflected correctly in their own return
• Trusts with tax returns outstanding from earlier years

Trust tax returns done properly, every year

A trust is a relationship, not a legal entity, but the ATO treats it as a taxpayer in its own right. That means the trustee is responsible for registering the trust, lodging its tax return and paying any tax the trustee is liable for. The ATO requires a trust tax return each year regardless of the amount of net income, unless it advises the trustee that a return is not required.

Most trusts use the Trust tax return (NAT 0660). The ATO's 2026 instructions note that attribution managed investment trusts, attribution CCIV sub-fund trusts and public trading trusts are the exceptions. A trust return can be lodged through standard business reporting software, by paper, or through a registered tax agent.

Ross Accounting Pty Ltd is a registered tax agent with the Tax Practitioners Board, registration number 21430015, which you can check on the TPB public register. Our team prepares trust accounts and returns alongside company and SMSF work, and the firm also has an in-house solicitor for legal matters. If you are still deciding whether a trust suits you, start with our trusts service.

Trustee resolutions by 30 June

For a discretionary trust, the year-end resolution decides who is taxed on the trust's income. The ATO says a resolution making beneficiaries entitled to trust income for an income year is only effective for tax if it is made by the end of that year, 30 June, or by an earlier date if the trust deed requires one. For the 2026–27 income year, that generally means by 30 June 2027.

• Capital gains from trust capital: appointing capital to make a beneficiary specifically entitled to a capital gain can be done within 2 months after year end, by 31 August.
• Streaming: franked dividends and capital gains can only be streamed to particular beneficiaries if the entitlement is recorded in writing in the trust's records, by 30 June for franked dividends and by 31 August for capital gains.
• Check the deed first: the ATO suggests confirming you have the complete deed with every amendment, that each intended beneficiary is within the eligible class, that the trust has not vested, and whether a family trust election is in force.
• Know what "income" means for your trust: the deed sets how trust income is calculated, and the resolution needs to follow that definition.

There is no standard ATO wording, because deeds differ, but a written record gives better evidence and avoids later disputes. If a resolution is ineffective, default beneficiaries or the trustee may be assessed instead. Our trustee resolutions guide walks through the checklist.

An income resolution made after 30 June is generally not effective for that year's tax, so get in touch well before the end of June.

How beneficiaries and the trustee are taxed

Generally, beneficiaries are taxed on their share of the trust's net income, whether or not the money is actually paid to them. A beneficiary who is presently entitled to a share of the trust's income (for trust law purposes) and is not under a legal disability is assessed on the same percentage share of the trust's net income for tax purposes, unless capital gains or franked dividends have been streamed.

Trust income and taxable net income are often different numbers. The ATO's instructions explain that the income of the trust estate is worked out under trust law and the deed, and may differ from both the accounting profit and the net income for tax. The return reports both, along with each beneficiary's share of each.

• Income no beneficiary is entitled to: the trustee is assessed under section 99A at the highest marginal rate for resident individuals, unless the Commissioner decides that would be unreasonable in limited cases such as deceased estates.
• Non-resident or legally disabled beneficiaries: the trustee may be assessed on their behalf.
• Losses: a trust cannot distribute an overall tax loss to beneficiaries. Losses generally stay in the trust and can be carried forward if the trust loss tests are met.
• PAYG instalments: the trust itself does not pay instalments, but beneficiaries may need to pay instalments on their share of the trust's instalment income.

Beneficiaries generally show their share in the partnerships and trusts section of their own return, so the trust's figures need to be ready before they lodge. We can prepare the beneficiaries' individual tax returns and company tax returns at the same time.

The statement of distribution and closely held trusts

Item 58 of the trust return is the statement of distribution, which sets out each beneficiary's share. The ATO requires this information to be given to each beneficiary so they can complete their own return, and the ATO says it increasingly uses data matching to check that tax returns, including the statement of distribution, are correct.

Closely held trusts, which include family trusts, carry extra obligations. Beneficiaries need to quote their tax file number (TFN) to the trustee, and if they do not do so before a payment or entitlement arises, the trustee must withhold tax at the top rate and report it. Where a closely held trust (other than a family trust) has a trustee beneficiary, the trustee must give the ATO a correct trustee beneficiary statement. If it does not, trustee beneficiary non-disclosure tax can apply, which the 2026 instructions say is currently imposed at 47%.

Beneficiary TFNs move into the return from 2026–27

The ATO confirms this change is now law. From 1 July 2026, trustees of closely held trusts no longer lodge a quarterly beneficiary TFN report. Instead, beneficiary TFNs are reported in the statement of distribution, starting with the 2027 trust tax return (the 2026–27 income year), which will include extra labels for beneficiaries who have not quoted a TFN. The final quarterly report, for April to June 2026, was due by 31 July 2026. TFN withholding obligations are unchanged.

Family trust elections

If a family trust election is in force, distributions to anyone outside the family group of the individual named in the election attract family trust distribution tax. The ATO describes this as the top marginal rate plus the Medicare levy, currently 47%, payable by the trustee. Checking the family group before each resolution helps avoid an unexpected liability.

When trust tax returns are due

The ATO's registered agent lodgment program for 2026–27 covers the 2025–26 trust returns being lodged now. The due date for a particular trust depends on its lodgment history, its income and tax liability in the latest return lodged, whether it is a new registrant and when it was added to the agent's client list.

The ATO notes that when a due date falls on a weekend or public holiday, lodgment and payment can be made on the next business day. 31 October 2026 is a Saturday. For 2025–26 trust returns due on 15 May 2027, payment dates are staggered by when the return is lodged: 21 March 2027 if lodged by 12 February 2027, 21 April 2027 if lodged from 13 February to 12 March 2027, and 5 June 2027 if lodged from 13 March 2027. For returns with any other due date that are lodged on time, tax is generally payable on the later of 21 days after the lodgment due date or 21 days after the notice of assessment is taken to be received. If a return is lodged late, tax is payable 21 days after the lodgment due date, and general interest charge applies to amounts unpaid after the due date.

Dates for 2026–27 trust returns, due in 2027–28, have not been published yet. See the tax calendar and our tax return deadlines guide for the wider timetable.

Records a trust needs to keep

The ATO's 2026 trust instructions say a trust generally needs to keep its records for 5 years after they were prepared or obtained, or 5 years after the transactions they relate to were completed, whichever is later. Records need to be in writing and in English, and can be kept electronically if the ATO can access and understand them.

Beyond everyday income and expense records, the ATO lists a copy of the trust deed, every trustee resolution, a detailed statement of assets and liabilities, and the name and contact details of the trustee at year end. Records for tax losses and capital gains assets often need to be kept longer, until the period for reviewing the year the loss or gain is finally used has passed.

What is new and what is only announced

• 2025–26 returns (law): the $2 minimum for deductible gifts has been removed, small business entities (aggregated turnover under $10 million) can instantly write off eligible assets costing less than $20,000 that were first used or installed ready for use between 1 July 2025 and 30 June 2026, and general interest charge and shortfall interest charge incurred on or after 1 July 2025 are no longer deductible.
• 2026–27 onwards (law): beneficiary TFNs are reported in the trust return instead of quarterly TFN reports, as described above.
• Announced, not yet law: in the 2026–27 Federal Budget the Government announced a 30% minimum tax on discretionary trusts from 1 July 2028, applied at the trustee level, with a 3-year restructure rollover proposed from 1 July 2027. The ATO states this measure is not yet law, and exposure draft legislation was open for consultation from 3 to 18 September 2026.

Details of the announced trust measure may change before any law is passed. Our tax advice and planning service can review where a discretionary trust fits once the final rules are known.

How it works

1. 1
   Get in touch before 30 June

   Call 1300 711 149, or contact us, so the year-end trustee resolution can be considered while there is still time.

2. 2
   Review the deed and resolution

   We check the trust deed, the beneficiary class, any family trust election and how the deed defines income, then help document the resolution.

3. 3
   Prepare the accounts and return

   We prepare the trust's financial statements, work out trust income and net income, and complete the trust tax return and statement of distribution.

4. 4
   Lodge and report to beneficiaries

   Once the trustee approves it, we lodge the return and give each beneficiary the figures they need for their own tax return.

What to bring

• A complete copy of the trust deed, including every amendment
• The trustee resolution (or minutes) for the year, and prior year resolutions
• Names, addresses and TFNs of the trustee and all beneficiaries who received a distribution
• Bank statements for every trust account
• Investment records: dividend, interest and managed fund statements, and purchase and sale records for any assets sold
• Rental property statements, loan statements and expense receipts, if the trust holds property
• Business income and expense records or bookkeeping files (Xero, MYOB or QuickBooks), if the trust runs a business
• Details of any family trust or interposed entity election, and last year's trust tax return