Trust Resolutions: Why Timing and Evidence Matter

A recent Administrative Review Tribunal decision, Goldenville Family Trust vs. Commissioner of Taxation [2025], is a timely reminder that in tax planning, the clock and your paper trail matter. The case involved a family trust that generated significant income. For the 2015, 2016 and 2017 income years, the trustee resolved to distribute most of that income to a non-resident beneficiary. The trustee believed the income was interest, so they assumed a 10% final Australian tax under non-resident withholding would apply. That was more attractive than taxing Australian resident beneficiaries at higher marginal rates.

The ATO challenged both the character of the income and the effectiveness of the trustee’s resolutions. Critically, the Tribunal agreed that the distribution resolutions were invalid. Why? There was not enough evidence to prove the distribution decisions were actually made before the end of each relevant income year.

Some documents were dated and signed “30 June”, but the Tribunal was not convinced the decisions were made by year-end. The evidence suggested the documents were prepared months later, after the accountant had finalised the financial statements. The practical outcome was costly. Default beneficiaries, all Australian residents, were assessed on the income at higher rates.

Timing is everything for trust distributions

For a trust distribution to be effective for tax purposes, a valid decision must be made on or before 30 June each year, or earlier if your trust deed requires it. You may type and sign formal minutes after year-end, but those minutes must reflect a genuine decision made by the deadline.

Example: A corporate trustee with multiple directors meets on 29 June at a specific location. The directors make formal decisions about how that year’s income will be appointed to beneficiaries. A director keeps handwritten notes of the meeting and the decisions. On 5 July the minutes are typed up and signed. The ATO indicates that this is normally acceptable, subject to the trust deed’s requirements.

If the ATO concludes the decision was made after 30 June, or that documents were backdated, the resolution can be declared invalid. Default beneficiaries may then be taxed on the trust’s taxable income, or the trustee may be assessed at penalty rates. Beyond tax, you can face practical headaches about which beneficiaries are truly entitled to cash.

Evidence turns intent into outcomes

Contemporaneous evidence is the difference between a plan and a defensible position. Useful evidence may include:

• Calendar invitations that identify the meeting date, time, attendees and agenda
• Handwritten notes taken during the meeting
• Board or trustee papers circulated before the meeting
• Signed resolutions or minute extracts that match the notes
• Time-stamped emails to your accountant or lawyer summarising the decision before 30 June
• Digital signing logs that show when documents were executed
• File metadata that aligns with the stated timelines

Ensure your trust deed allows the method you use to resolve decisions. Where deeds require a physical meeting, a circular resolution may not be sufficient. Where consent from a guardian or appointer is needed, build that into your process and file the evidence with the minutes.

It is not just trusts: timing matters elsewhere too

The Goldenville lesson applies across the tax system. A common example is Division 7A:

• If a private company makes a loan to a shareholder or associate in an income year, it must be repaid in full or placed under a complying Division 7A loan agreement by the earlier of the due date or actual lodgement date of the company’s tax return for that year
• If not, a deemed unfranked dividend can arise
• Where you intend to set off a declared dividend against the loan balance, you need evidence of when the dividend was declared and when the parties agreed to the set-off, both before the relevant deadline
• Insufficient evidence can turn what you thought was a tidy housekeeping exercise into a taxable deemed dividend.

A practical workflow before 30 June

Use this checklist to build good habits and reduce risk:

1. Check the deed - Confirm who must make the decision, how it must be made, and any special requirements.
2. Set the timeline - Work back from 30 June. Lock in meeting times, circulate draft distribution plans and tax estimates early.
3. Decide, then document - Hold the meeting or execute the circular resolution by 30 June. Take notes. Record the allocation method and amounts or percentages.
4. Create a time-stamped record - Send a same-day email to your accountant or lawyer summarising the decision. Attach notes or a draft resolution.
5. Finalise minutes - Prepare and sign formal minutes shortly after year-end. Ensure they reflect the decision that was actually made before 30 June.
6. File and retain evidence - Keep invitations, notes, emails, signing logs and any consents together in a single folder for that year.

Common pitfalls to avoid

• Relying on undated or inconsistently dated documents
• Backdating minutes to 30 June without contemporaneous evidence
• Ignoring deed-specific requirements for meetings, quorums or consents
• Leaving distribution planning until after the annual accounts are finalised
• Assuming software timestamps alone will save a weak file

The bottom line

Tax planning turns on what was decided, by whom, and when. Build your file as you go, not after the fact. That approach protects your intended distribution outcomes and reduces the risk of a reassessment, penalties and disputes among beneficiaries.

If you would like help reviewing your trust deed, setting an evidence-led year-end process, or checking Division 7A timelines and documents, contact Trekk Advisory. Our team can help you put robust steps in place before year-end, so your strategy holds up when it counts.