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Discretionary Trust Distribution Minute

Use Cleardocs to create effective resolutions for distribution of your Discretionary (Family) Trust income. The Cleardocs package makes it easy and helps you to comply with all ATO and trusts law requirements. Trust income must generally be distributed to beneficiaries before the end of the income year (30 June).

$60.50
  • Cleardocs fee incl GST $60.50
Product Benefits
  • Assists with ATO and trusts law compliance
  • The trust does not require an underlying Cleardocs deed
  • Pre-population of trust details from earlier Cleardocs orders - saving you typing
  • Flexibility in allowing for interim and final distributions
  • Easy to use question interface
  • Extensive online help and local phone support
Product Information

What documents are included in the Cleardocs package?

The Cleardocs Trust Distribution Minute package includes:

  • minutes or resolutions of the trustee(s) or director(s) of the corporate trustee (as needed by your particular trust);
  • an Establishment Kit explaining what to do next.

What information do you need to order the Trust Distribution Minute?

Our checklist outlines all the information required.

Trustee obligations to distribute income

It is important for a trustee to plan for end of year distributions. Our ClearLaw article titled "Tax issues for trusts — essential reading for all trustees" outlines the effect of a trustee's resolution to distribute income and the tax consequences of a trustee failing to pass a resolution by 30 June, or at all. Further guidance is provided in Tax Determination 2012/22 and the ATO's Resolutions checklist.

Cleardocs deed not required

To use this Cleardocs Package, a trust does not require an underlying Cleardocs deed.

If the trust does not have a Cleardocs deed in place, you should review the deed to ensure the Minute or Resolution is consistent with the procedures set out for the particular transaction or event. If you are unsure, you should obtain your own legal, financial and accounting advice — we cannot give you that advice.

Do I need minutes or resolutions?

The Cleardocs Trust Distribution Minute product recognises that trustees can make decisions as follows:

1 individual trustee by the sole trustee signing a resolution
Individual trustees at meetings (that is, documented as minutes)
Corporate trustee — 2 or more directors at meetings (that is, documented as minutes);
OR
by all directors signing a set of resolutions
Corporate trustee — 1 director by the sole director signing a set of resolutions

Seek legal advice

The Trust Distribution Minute information here should be considered general in nature, and in no way interpreted as legal advice. You must always seek your own independent legal, accounting and financial advice about your particular situation. The summary on this page is for information purposes only.

Frequently Asked Legal Questions

Cleardocs is not a law firm. So as with all the legal material on this site, the answers to these "frequently asked legal questions" are provided by the law firm Maddocks. Cleardocs does not endorse those answers.

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Does the trustee of a discretionary trust decide what is the 'income' of the trust?

The definition of the 'income of a trust estate' is important as it determines who – the trustee or the beneficiaries of a trust – is liable to pay tax on the taxable income of the trust estate. This issue attracted considerable attention in 2010 in Bamford's case, which is authority for the view that the income of the trust is whatever the trust deed determines it to be.

The trust deed will set out whether the trustee has power to decide what is the 'income' of the trust.

If your discretionary trust has a Cleardocs trust deed: Yes, the trustee decides. The Cleardocs discretionary trust deed contains a 'default' definition of 'income of the trust fund'. The trustee may, at any time prior to 30 June in a financial year, decide to adopt another definition of 'income of the trust fund' for that financial year and the trustee can do so by signing a minute to this effect.

If your discretionary trust does not have a Cleardocs trust deed: Your trust deed may or may not allow the trustee to decide what is the 'income' of the trust. You should check the terms of your trust deed and obtain professional advice about whether the trustee has the ability to adopt a different definition of 'income' – and in what circumstances.

Does the trustee of a discretionary trust have to distribute all of the net income of the trust in a given financial year?

This depends on the terms of your trust deed.

If your discretionary trust has a Cleardocs trust deed: The trustee does not need to distribute all of the net income of the trust in a given financial year: rather, the trustee has the discretion to either distribute or accumulate the income. If the income is accumulated, it is taxed in the hands of the trustee at the highest marginal tax rate and becomes part of the capital of the trust fund.

The trustee must make a decision whether to distribute or accumulate the income by 30 June in that financial year. If the trustee does not exercise their discretion, the trustee will lose their discretion in respect of income in respect of which the discretion has not been exercised, and the income will be automatically distributed to certain beneficiaries in accordance with the trust deed (and held on trust pending payment).

If your discretionary trust does not have a Cleardocs trust deed: Your trust deed may or may not require the trustee to distribute all of the net income of the trust in a given financial year. You should check the terms of your trust deed and obtain professional advice about your trust deed's requirements.

Can the trustee of a discretionary trust distribute a dollar amount rather than a percentage of income of the trust?

Yes. When you order from Cleardocs, in the minute or resolution resolving to distribute and/or accumulate net income of the trust, you can specify either:

  • percentages (up to 100%) that each beneficiary is to receive; or
  • maximum dollar amounts that each beneficiary is to receive – and to whom the balance of the net income less these dollar amounts (if any) will be distributed.

Before choosing the second option, the trustee will need to ensure there is sufficient income of the trust to make the distribution. If the trustee makes a resolution to distribute income it does not have – or fails to make a decision with respect to income it does have – this can cause issues (see above).


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