Most private groups in Australia are built on a discretionary trust, a company or two, and a deed nobody has read since it was signed. That structure works until something tests it: a distribution the ATO looks at, an appointor who dies, a deed that never defined income, or a vesting date that arrives on its own.
This is the core of the practice. It is also the area where the law has moved fastest — Division 7A and unpaid present entitlements, section 100A and reimbursement agreements, the reach of trustee discretions, and the proposed minimum tax on discretionary trust distributions.
Where we act
What we do
- Division 7A: deemed dividends, complying loan agreements, unpaid present entitlements, interposed entity rules and section 109RB relief
- Section 100A: reviewing distribution arrangements against the reimbursement agreement provisions and the ordinary family or commercial dealing exclusion
- Year-end trustee resolutions — drafting, reviewing and fixing what the deed actually requires
- Trust deed review, variation and rectification, including appointor and guardian succession
- Trust vesting dates: identifying them, advising on the consequences, and planning the wind-down
- Family trust elections and interposed entity elections, and family trust distribution tax exposure
- Excluding foreign beneficiaries to manage surcharge duty and surcharge land tax
- Streaming of capital gains and franked distributions, and specific entitlement
- Private group restructures, corporate beneficiaries and intra-group loan accounts
- Estate and succession issues where the trust, not the will, controls the wealth
Common situations
What we are usually brought in on
The deed does not define income
Where the deed is silent, income takes its ordinary meaning and capital gains may fall outside it. A large gain then cannot be distributed under the income clause and the trustee is assessed.
The default clause does not create a present entitlement by 30 June
If the resolution is missed and the default clause only operates after year end, there may be no present entitlement at all, and the trustee is assessed at the top rate.
The appointor line has dead-ended
Appointor dies, successor dies, and the deed has no failsafe. Nobody can remove or replace the trustee without a court application.
The beneficiary class sweeps in foreign persons
A wide class — every relative and their spouses and descendants — can trigger foreign purchaser duty surcharge and foreign person land tax on trust property.
Nobody has checked the vesting date
Trusts settled in the 1980s and 1990s are reaching vesting. On vesting, the discretionary powers end. In some cases duty consequences follow from nothing more than the passage of time.
How we work
Our approach
Read the deed. Every trust question starts with the actual instrument, not the template it came from. A surprising proportion of trust problems are deed problems.
Fix it before it is tested. Deed defects, missing streaming powers and broken appointor succession are all cheaper to fix now than to argue about later.
Work alongside the accountant. Most of this work is done with the client’s accountant, not around them. We are not a tax agent and do not compete for compliance work.
Common questions
What is the deadline for trustee resolutions?
For a discretionary trust, a beneficiary generally has to be made presently entitled to trust income by 30 June for that income year, and many deeds require the resolution to be made before that date. Whether a valid present entitlement has been created depends on the deed, the resolution and the trust’s accounts — not on when the tax return is lodged.
Is an unpaid present entitlement a Division 7A loan?
The Commissioner maintained for many years that a corporate beneficiary’s unpaid present entitlement amounted to financial accommodation and so a loan. That position was rejected by the Full Federal Court and then by the High Court. The position for prior years, and the interaction with other provisions dealing with unpaid entitlements, still needs to be worked through case by case.
How do I find out when my trust vests?
The vesting date is in the deed, but the deed has to be read against the perpetuity rules of the governing jurisdiction, which vary between states and have changed over time. Where the deed refers to a perpetuity period rather than a fixed date, working out the actual vesting date is a legal question.
Related insights
Further reading
Trusts
Five traps hiding in old trust deeds
Appointor dead-ends, no income definition, defective default clauses, foreign beneficiaries and missing streaming powers: five defects in older trust deeds.
Trusts
Trust vesting: the deadline hiding in a 1985 deed
When a trust vests, discretionary powers end, income splitting stops, CGT arises on transfer out, and duty may be triggered by the passage of time alone.
Division 7A
Bendel is decided. Now mind the window
The High Court has held an unpaid present entitlement is not a Division 7A loan. What it means, what must be unwound, and why 1 July 2028 changes things.
Trusts
Section 100A: when trust distributions come undone
How section 100A applies to trust distributions, what the ordinary family or commercial dealing exclusion requires, and what Guardian and BBlood decided.
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