Family trusts: can and can't

Full text of the video

This video has no voice-over. This is everything shown on screen, in order.

1. Family TrustsWhat a trust can and can't do
2. CANTrustee allocates the incomewithin what the trust deed allows
3. CANAdult beneficiaries pay at their own rateson their share of the net income
4. CAN'THand out a lossIt stays in the trust and carries forward
5. CAN'TTax kids like adults$4162025-26: most trust income for under-18s above this is taxed at higher rates
6. CAN'TDecide after 30 JuneResolutions make beneficiaries entitled by 30 June

Sources

• ATO - Trust income, losses and capital gains (print section, published 25 Feb 2025)

  The entitlement will depend on the trust deed and any discretion that the trustee has under the deed to allocate income between beneficiaries.

  Adult and company beneficiaries pay tax on their share of the trust's net income at the tax rates that apply to them.

  A loss made by a trust in an income year can't be distributed to beneficiaries. However, it can be carried forward and used to reduce the trust's net income in a later year.

  Higher rates of tax apply to most trust distributions to minors

  The important thing is that your resolution makes one or more beneficiaries presently entitled to the trust income by 30 June.

• ATO - Tax rates if you're under 18 years old

  Table 1: Tax rates for residents who are under 18 for 2025-26

  Nil plus 66% of the excess over $416

  45% of the total amount of the income that is not excepted income