The maximum amount you can distribute from a family trust to a child who is under the age of 16 on the trust balance date is $1000 to still have this taxed at the child’s personal tax rate.
If you distribute just one dollar more, the tax rate becomes the same as for the trust.
It’s easy for us, with our busy business lives, to not notice when a child goes over the age of 16. Instead of paying 39% tax on the trust income, it could be handy to allocate some of its income to the youngster, perhaps to help with tertiary education. Once the age of 16 has been reached, the amount you can allocate to a young person is no longer limited