Trust Income Allocation to Tax-Exempt Beneficiaries 

What is the proposed change?

• A private trust must pay beneficiary income to a tax-exempt beneficiary within the specified period. If it is not paid on time, it will be taxed at the trustee rate.

• Change will apply from 2028-2029 income year. 

What is the proposed specified period?

• A private trust must pay beneficiary income to a tax-exempt beneficiary within the specified period.

• The specified period ends on the later of:

  • Six months after the trust’s balance date; or

  • The earlier of the trust’s actual tax return filing date or required filing date.

• If the income is not paid within this period, it will be taxed at the trustee tax rate.

Who does this apply to?

• This change only applies private trusts that allocate income to tax-exempt beneficiaries