Business Structures & Setup
Family & Discretionary Trust Setup
A discretionary trust is one of the most flexible and tax-effective structures available to Australian families and business owners. PHC & Associates handles the complete setup — from trust deed preparation and trustee appointment to ATO registration and distribution strategy advice.
1000+
Structures Set Up
CPA
Certified
Trust Deed
Preparation Included
What's Included
Everything Covered in This Service
Trust deed preparation by a qualified solicitor or legal document service
Trustee appointment — individual or corporate trustee
Beneficiary class definition — broad vs narrow
TFN and ABN registration for the trust
GST registration if required
Bank account setup coordination
Annual trustee resolution guidance — distributions by 30 June
ATO tax file number registration and first-year compliance briefing
Key Concepts
What You Need to Know
Understanding the essentials helps you make better decisions and ask the right questions.
How a Discretionary Trust Works
A trustee holds assets for the benefit of beneficiaries. The trustee has full discretion over how income is distributed each year — allowing income to be directed to beneficiaries in the lowest tax brackets. The trust itself pays no tax if all income is distributed.
Trustee vs Beneficiary
The trustee manages the trust and makes distribution decisions. Beneficiaries receive income distributions and may also receive capital when the trust is wound up. The settlor establishes the trust by making a nominal gift to the trustee.
Distribution Flexibility
Each year, the trustee can distribute income differently — more to a beneficiary in a low-income year, less to one who has earned more. This flexibility is the primary tax advantage of a discretionary trust over a company.
The 30 June Resolution Requirement
Trustee resolutions directing how income will be distributed must be made and documented before 30 June each year. A missing or invalid resolution results in the trustee being assessed at the top marginal rate of 47%.
Why It Matters
Why This Matters for Your Business
The decisions you make at setup have long-lasting consequences — financially, legally, and operationally.
Income Splitting Reduces Tax
A family discretionary trust can distribute income to adult children, spouses, and corporate beneficiaries — allowing the family group to legally minimise its overall tax burden by using lower marginal rates.
Asset Protection from Creditors
Assets held in a properly structured discretionary trust are generally protected from the personal creditors of the beneficiaries — making trusts a preferred structure for professionals with litigation exposure.
Flexibility Cannot Be Replicated in a Company
A company must pay dividends proportionally based on shareholding. A discretionary trust can distribute any amount to any beneficiary each year — adapting to changing incomes and circumstances.
Trusts Facilitate Intergenerational Wealth Transfer
Discretionary trusts can hold assets for multiple generations without triggering CGT on transfer — subject to careful structuring. This makes them a preferred vehicle for family wealth planning.
Setup Must Be Done Correctly
An improperly drafted trust deed — particularly one with a narrow beneficiary class — can severely limit distribution flexibility and create unexpected tax outcomes. Professional setup is essential.