A recent ruling from the Administrative Review Tribunal, Goldenville Family Trust v Commissioner of Taxation [2025], underscores that proper documentation and reliable evidence are fundamental to successful tax planning. The case demonstrates the severe consequences of getting this wrong.

The dispute involved a family trust with substantial income. For the 2015, 2016 and 2017 income years, the trustee attempted to distribute most of this income to a non-resident beneficiary. The trustee classified the income as interest, which would have attracted a final 10% withholding tax. This outcome was clearly more favourable than having the income taxed at the higher marginal rates applicable to Australian resident beneficiaries.

However, the ATO challenged this arrangement. The Tribunal ultimately agreed with the ATO and ruled the distribution resolutions were invalid. 

What was the main problem? The trustee failed to provide sufficient evidence that the distribution decisions were actually made before the end of each financial year.

Some documents were presented and dated 30 June. Yet, the Tribunal was not convinced these reflected a genuine, timely decision. The evidence indicated the decisions were likely made months after the year-end, only after the accountant had finalised the trust’s financial statements. Consequently, the trust’s default beneficiaries, who were all Australian residents, were taxed on the income at much higher rates.

Why the Timing of Trust Resolutions is Critical

For a trust distribution to be valid for tax purposes, the trustee must make a definitive decision on allocating income by 30 June. The trust deed may sometimes require an earlier date. While the formal minutes can be written up later, those documents must accurately reflect a bona fide decision that was reached before the deadline.

Consider a corporate trustee with several directors. If the directors hold a meeting on 29 June and make formal decisions about income distribution, someone should keep handwritten notes. Typing and signing the formal minutes on 5 July is generally acceptable to the ATO. This practice is permissible provided the trust deed does not specify otherwise.

If the ATO concludes a decision was made after 30 June, or that documents were backdated, it can declare the resolution invalid. This can trigger a costly tax outcome. The default beneficiary may be taxed on the income, or the trustee may be taxed at penalty rates. This also creates uncertainty about which party is truly entitled to the trust’s cash distributions.

Broader Lessons Beyond Trust Distributions

This principle of timing is not unique to trust distributions. Other areas of tax law also depend on when a decision was genuinely made, not merely when it was recorded.

For example, a private company that makes a loan to a shareholder must ensure the loan is repaid or placed under a formal Division 7A loan agreement by a strict deadline. Failure to do so triggers a deemed unfranked dividend for the shareholder.

If a complying loan agreement is established, minimum annual repayments must then be made to prevent further deemed dividends. A common repayment method uses a set-off arrangement against company dividends. For this set-off to be valid, specific steps must be completed before the deadline. The ATO will require evidence that proves two key facts: when the company declared the dividend, and when the parties agreed to the set-off.

Without strong evidence showing these steps were completed on time, the borrower may face a large, unexpected tax bill on a deemed unfranked dividend.

Documenting Decisions Before the Deadline

The main lesson from the Goldenville case is that documentation must be concurrent. Lack of proper records can fundamentally alter a tax outcome. The legal focus is on when the decision was actually made, not when the paperwork was finalised.

In practical terms, this means you should adopt a disciplined approach. First, identify all relevant deadlines and the actions required before them. 

Second, follow a formal process for making necessary decisions. Determine if a meeting is required or if a circular resolution is sufficient.

Third, create concurrent evidence that a decision was made. Sending a brief email to your accountant outlining the decision before the deadline provides a time-stamped record. 

Finally, you can formalise the paperwork afterwards. The minutes can be prepared and signed after year-end, but they must be an accurate record of the earlier decision.

Careful attention to timing, supported by a habit of creating clear evidence, is often what separates a successful tax strategy from a costly and stressful dispute with the ATO.

If you’d like help reviewing trust resolutions, document timing, loan arrangements or year-end documentation, contact Bates Cosgrave for clear, practical advice and a review of your records.