The ATO Announces an important development that will affect the taxation of distributions being made by discretionary trusts (including family trusts).

On 23 February 2022, the Tax Office released a number of documents that outlined a new and very aggressive approach to the taxation of trusts, particularly where trust distributions have not been physically paid to a beneficiary.

Under these guidelines, the Tax Office have threatened to effectively reverse certain valid trust distributions and tax these amounts to the trustee of the trust at 47% (as though this income was not distributed to any beneficiary).

These new guidelines may affect trust distributions for the current income year. However, the Tax Office have indicated these guidelines may be applied retrospectively.  We are amazed that the ATO could consider this retrospective action.

Importantly, we believe that trust distributions from your trust(s) were made in accordance with the guidelines that were made available by the Tax Office at the time.

Nonetheless, these new guidelines are a grave concern because they reflect a direct attack on many common trust arrangements, which may result in your circumstances being considered a higher risk from an audit perspective.

We ask that you please contact our office as a matter of priority so that we can:

  • Explain what these new rules are and what they will mean for your family group.
  • Undertake a review of your estimated tax position for the 2022 income year, for all trusts in your family group. We may need to reconsider our tax planning strategies for your group as the new guidelines may change the way you wish to distribute trust income.
  • Undertake a risk-assessment of trust distributions made in prior years.


Please contact our office on (03) 9428 9630 to arrange an appointment as soon as you have an opportunity to so.


Think Accountants