Establish the gain and the relevant dates
Collect the purchase contract, settlement statement, improvements, selling costs and depreciation records. The contract date usually matters for CGT timing. Confirm the cost base rather than relying on the original purchase price alone.
Read the deed before preparing resolutions
The trust deed governs how income and capital gains may be dealt with. Tax concepts such as specific entitlement also matter. The trustee should obtain legal and tax advice before 30 June so resolutions reflect the deed and the intended tax outcome.
Check who can receive the gain
Beneficiary eligibility, tax rates, carried-forward losses, residency, minors, companies and unpaid present entitlements can all affect the result. A distribution should have a commercial and legal basis; it is not a last-minute allocation exercise.
Plan the cash
A paper distribution can create a real entitlement. Keep enough cash for tax, loan payout and beneficiary payments. Document how sale proceeds will be retained, reinvested or distributed.
How the trust calculation is built
The calculation usually begins with sale proceeds less eligible cost-base amounts. The cost base may include purchase price, duty, legal fees, certain ownership costs, capital improvements and selling costs, subject to the rules and the property’s history. Depreciation and capital-works claims can affect the final figures.
If the trust held the property for at least 12 months, the discount method may be relevant. The trust deed, beneficiary entitlements and tax rules then determine how the gain is treated. Do not estimate the outcome from the bank deposit received at settlement.
Specific entitlement and streaming
A trustee may seek to make a beneficiary specifically entitled to a capital gain. That requires more than naming someone in a spreadsheet. The deed must allow the approach, the resolution must be valid and timely, and the beneficiary’s entitlement should be supported by the trust accounts and actual legal rights.
Division 6E and the capital-gains provisions are technical. Have the accountant and lawyer align the resolution, accounting entries and payment plan before year end.
Pre-sale and pre-30 June checklist
- Confirm the contract date and expected settlement date.
- Reconstruct the cost base and obtain missing invoices.
- Review carried-forward trust capital losses.
- Read the deed and identify eligible beneficiaries.
- Estimate each beneficiary’s taxable income and relevant constraints.
- Plan tax instalments, debt repayment and cash distributions.
- Prepare and sign trustee resolutions within the required timing.
Do the work before contracts are signed
A pre-sale estimate can identify whether the trust has usable losses, whether records are missing and whether a beneficiary’s circumstances create a problem. It also gives the family time to plan cash for tax. Waiting until settlement may still be early enough for some steps, but waiting until the tax return is being prepared removes options.
The trustee should also check whether the property sale changes GST registration, trust activities or the ability to pay existing liabilities.
Beneficiary-level issues
A beneficiary may have personal capital losses, other gains, high income, residency issues or eligibility for the CGT discount. Corporate beneficiaries do not receive the general 50% discount. Minors and non-residents can have special treatment. Social-security, family-law and estate-planning consequences may also matter.
The tax outcome should be modelled using current information and then refreshed near 30 June. A beneficiary’s position can change between contract and year end.
Common trust-sale mistakes
Frequent problems include missing purchase and improvement records, assuming every renovation enters the cost base, confusing cash distributions with tax entitlements, and signing a standard resolution that does not match the deed. Trustees also overlook loan balances and distribute sale proceeds before reserving enough for tax and expenses.
A clean file should show the calculation, deed authority, trustee decision, beneficiary entitlement and movement of cash.
A structured review process
Begin the trust property sale review by assembling the contracts, settlement statements, improvement invoices, depreciation schedules, deed and prior resolutions. Write down what is confirmed, what is estimated and what still depends on another party. This prevents an early assumption from quietly becoming the basis of the whole decision.
Next, work through cost base, capital losses, discount eligibility, specific entitlement and beneficiary positions. Put the result into a short decision paper showing the preferred approach, the main alternative, the expected cash requirement and the matters that still need professional confirmation. The purpose is to make the trade-offs visible before a deadline or signed document removes flexibility.
Who should confirm each part?
The relevant team may include the accountant, lawyer, trustee and beneficiaries. Give each adviser the same facts and proposed timeline. Ask for written confirmation of the issues within their scope and make sure one person is coordinating the open items.
Tax advice does not replace legal drafting, legal advice does not confirm loan approval, and loan approval does not establish affordability. A coordinated review is valuable because these decisions overlap while the professional responsibilities remain distinct.
What can go wrong if the review is rushed?
The immediate risk is an invalid or late resolution, missing cost-base evidence or insufficient cash for tax. A rushed decision can also create secondary costs: refinancing, amendments, professional fees, penalties, lost bargaining power or a structure that is expensive to change later.
Use a written deadline plan. Mark the last practical date for tax review, legal changes, lender approval and transfer of funds. Leave time for documents to be corrected. If a key fact remains uncertain, model the unfavourable outcome rather than assuming it will resolve itself.
Records after the decision
Once the transaction or review is complete, retain the calculation, signed resolutions, accounts and evidence of distributions. Save the advice relied on and note any assumptions that must be revisited. Good records reduce the cost of future tax returns, refinancing, audits and sale planning.
Schedule a review when ownership, use, finance, income or legislation changes. Property decisions continue after settlement, and the original advice may no longer fit new facts.
Questions people ask
Can a trust use the 50% CGT discount?
A qualifying trust gain may retain access to the discount through eligible beneficiaries, subject to the rules and facts.
Can the trustee decide after 30 June?
Required resolutions generally need to be made within the deed and tax-law timing.
Does the contract date or settlement date determine the year?
For a typical CGT disposal, the contract date is usually relevant, but confirm the transaction.
Your next step
See the family trust guide and property sale checklist. Source: ATO trust capital gains guidance.
Tax, legal, lending and property outcomes depend on your facts. This is general educational information, not personal advice.
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