The ATO has extended its remission offer for the general interest charge (GIC) on family trust distribution tax (FTDT) liabilities by six months, to 30 June 2027. The relief applies to trustees who proactively review their family trust elections and disclose any FTDT owing and many trusts carry exposure their trustees don't know about. The amnesty won't be extended again, so the clock is already ticking.
47%
FTDT Rate
30 Jun 2027
Extended Deadline
Up to 80%
Maximum GIC Remission
Aug 2025
Relief First Offered
IN BRIEF
If your family trust has ever distributed income outside its family group, it may owe family trust distribution tax and the interest on an unpaid or undisclosed liability compounds quickly. The ATO will reduce that interest by up to 80% if you review your trust's history, disclose any liability and pay it before 30 June 2027. After that date, the offer ends.
What has the ATO changed?
Since August 2025, the ATO has offered to remit up to 80% of the general interest charge (GIC) on family trust distribution tax liabilities, where a trustee proactively self-reviews, discloses the liability and pays it. That offer was due to expire this year. The ATO has now extended it by a further six months, to 30 June 2027, and has indicated it does not intend to extend it again.
The remission itself isn't automatic — the ATO says it will "favourably consider" reducing the GIC where a taxpayer comes forward, which is a discretion rather than a guarantee. The FTDT liability itself is never waived. Only the interest charge sitting on top of it can be reduced.
What is family trust distribution tax, and why might you owe it without knowing?
Family trust distribution tax applies where a trust that has made a family trust election (FTE) or an interposed entity election (IEE) distributes income or capital to someone outside its nominated family group. The tax is charged at 47% of the distribution, and it's payable by the trustee, or in some structures a director or partner, not the beneficiary who received the distribution.
The difficulty is that FTDT liabilities are often invisible until someone goes looking. A trust might have made an FTE years or decades ago, under a specified individual who has since changed family circumstances, remarried or passed away. Distributions that looked routine at the time — to a related company, a new spouse, or an entity that has since moved outside the family group can trigger FTDT without anyone realising it at the time the return was lodged.
KEY CHANGE
GIC on an unpaid FTDT liability compounds for as long as it stays undisclosed. The ATO's own example: a $100,000 FTDT liability left unpaid since 2005 would now carry a GIC bill worth more than ten times the original tax. Coming forward before 30 June 2027 is the difference between a manageable disclosure and a liability that has grown far beyond the trust's capacity to pay.
How does the GIC remission actually work?
The relief isn't a blanket write-off. To access it, a trustee (or their tax agent) needs to proactively self-review the trust's elections and distribution history, notify the ATO of any FTDT liability found, and pay that liability. Only once those three steps are done will the ATO consider remitting up to 80% of the GIC that has accrued on it.
The ATO has also pointed trustees and agents to a specific tool to help with the review: the agent report "Family trust and interposed entity elections," which shows elections as lodged from 18 April 2026. Records of elections, family group membership and distributions need to be kept for at least five years after the trust's final lodgement obligations are met, a requirement that matters as much for avoiding a future FTDT problem as for resolving an existing one.
What should trustees do before 30 June 2027?
Review your family trust and interposed entity elections
Check when each election was made, who the specified individual is, and whether that individual's circumstances have changed since. A specified individual's death, divorce or remarriage can shift who counts as "family" for the purposes of the election, which changes what counts as a distribution outside the group.
Confirm every member of the family group, including corporate beneficiaries
The family group isn't limited to individuals. Related companies, trusts and other entities can be members of the group — or can fall outside it — depending on how they're connected to the specified individual. Getting this list right is the starting point for identifying which historical distributions, if any, created an FTDT exposure.
Check distribution history against that group, year by year
Work through each year's distributions against the confirmed family group, rather than relying on how the distributions looked at the time they were made. A beneficiary that was inside the family group in 2015 may not be today, and vice versa — the test is applied at the time of each distribution.
Tighten governance and record-keeping going forward
Where a review finds no current issue, use the exercise to put better processes in place: document the reasoning behind each election and each distribution decision, and retain records for at least five years after the trust's final lodgment obligations are met. This is the detail that makes a future ATO review straightforward rather than stressful.
This article is intended as general information only and does not constitute tax advice. Every business's situation is different. We recommend speaking with us directly to understand how these changes apply to your specific circumstances.
Not sure whether your family trust has an FTDT exposure?
Our team can review your trust's elections, confirm your family group and check your distribution history against it, so you know exactly where you stand before the 30 June 2027 deadline.