Does your Trust Deed get the best tax outcome?

A trust is established by a trust deed, which gives its trustee specific powers about the things it can do. The specific terms of your trust deed can mean you will either save or lose money in income taxes. It is important your deed is up to date and gives the trustee all the powers it needs to optimise the trust’s tax position.

Every income year, before 30 June, the trustee must execute trust distribution minutes recording how the trust’s income should be distributed that year.  This is the time when it is important that the trustee has the discretion about these things:

  • How trust law income should be defined that year, and whether it should be made to equal taxable ‘net income’;
  • Whether specific categories like capital gains and franked distributions (i.e. dividends with franking credits attached) can be accounted for separately;
  • Whether those specific categories should be streamed to any specific beneficiaries;
  • Whether a default beneficiary or ‘balance’ beneficiary should be nominated to be taxed on any ineffective distributions (such as after a tax audit).

A trustee does not have the power to make decisions about these things unless the trust deed specifically says so. If your trust deed does not give the trustee these powers then you could be missing out on significant tax savings. Your trust deed should be updated as soon as possible to change this.

If you would like your trust deed to be reviewed to see if it gives the trustee all the powers it needs, or if it should be updated, call Andreyev Lawyers on 1300 654 590 or email us.

The information contained in this post is current at the date of editing – 1 June 2023.


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It is well understood by savvy property investors that holding investment properties in a trust can offer the benefits of asset protection, estate planning and tax efficiency. The next question is whether these benefits extend to the family home. In other words, is it worth holding your family home in a trust?

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