Trust tax return preparation checklist (AU)
Trust returns carry unique risks — presently entitled vs specifically entitled, the s 100A risk on family trust distributions, and the trust loss schedule rules. This checklist covers the 12 areas most commonly tested.
This is a 12-step checklist for preparing an Australian trust tax return. It covers the 30 June resolution deadline, streaming of capital gains and franked distributions, s 100A reimbursement agreements, trust loss rules, and beneficiary allocations. Use it as a workpaper quality check.
The checklist
Confirm the trust deed and any variations
Identify the governing deed, all variations, and the current trustee. Confirm the definition of income and streaming powers.
Calculate trust income and net income
Calculate both accounting income of the trust (per the deed) and net income under s 95 (for tax purposes).
Prepare 30 June distribution resolution
Confirm the trustee resolution was made by 30 June (or such earlier date as the deed requires) and is valid.
Stream capital gains and franked distributions
Apply streaming elections for capital gains (Div 115-C) and franked distributions (Div 207) — beneficiary must be specifically entitled.
Assess s 100A risk
Review distributions to low-tax beneficiaries and whether the economic benefit flows to a higher-tax taxpayer under a reimbursement agreement.
Family trust election and interposed entity election
Confirm any FTE or IEE, the specified individual, and flows only to family group members to preserve franking credits and losses.
Apply trust loss tests
Run the pattern of distributions, 50% stake, control, and income injection tests where the trust has carry-forward losses.
TFN withholding for no-TFN beneficiaries
For closely held trusts, confirm TFN withholding obligations where beneficiaries have not quoted a TFN.
UPEs and Division 7A
Review unpaid present entitlements owed to corporate beneficiaries. Address current ATO position on UPEs and Division 7A.
CGT events at the trust level
Identify CGT events, apply the 50% CGT discount (individual or trust beneficiary), and consider small business CGT concessions.
Foreign resident beneficiary withholding
Apply withholding on distributions to foreign beneficiaries; confirm any treaty rate reductions.
Lodge return and beneficiary statements
Lodge the trust return by the due date and issue beneficiary statements so each beneficiary can include their share in their return.
When this checklist applies
Use this checklist on every trust return — discretionary, unit, hybrid, or testamentary. Confirm the distribution resolution and streaming position before 30 June.
Common pitfalls
- Resolution made or signed after 30 June — entire trust income taxed in trustee hands
- Streaming attempted without a valid specifically entitled resolution
- s 100A exposure on distributions to adult children who do not receive the economic benefit
- Trust losses trapped because the 50% stake test fails on a discretionary trust without an FTE
- UPE to corporate beneficiary treated as a loan without proper Division 7A compliance
Run this checklist on a real matter
Quillio drafts trust distribution resolutions from the deed and the year-end numbers, runs s 100A screening, and prepares beneficiary statements. See /practice-areas/tax-lawyers or start a free trial.
Trust taxation is complex and ATO positions on s 100A and UPEs continue to develop. Use this checklist with current technical guidance.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
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