Winding up · Trust vesting

Winding up a family trust in Victoria after the Budget changes.

For some families the trust has done its job. The business has been sold, the children are grown, the assets could as easily be held in the family's own names. Winding the trust up is simpler than converting it and avoids the company that has to be run afterwards. It is still a disposal of every asset for capital gains tax, a transfer for duty, and a final set of accounts and returns, and the proposed roll-over may apply to distributions to individuals in the window if the family is within the continuity test.

Start online Book a consultation

Lawyer-led structuring

Deeds, constitutions and transfer documents prepared by a solicitor, not generated from a kit.

Alongside your accountant

The tax modelling stays with your adviser; the legal structure is built to match it.

Fixed fee, quoted first

Quoted before any work starts, with duty, searches and ASIC costs itemised separately.

Property and duty in-house

Victorian duty, land tax and the property transfers handled by the same firm.

Proposed law

The 30% minimum tax on discretionary trusts is before Parliament and is not yet law. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and the Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026 were introduced on 14 October 2026. As introduced, the tax would apply from 1 July 2028 and the restructure roll-over would run from 1 July 2027 to 30 June 2030. The detail may change before enactment. Last reviewed 27 October 2026.

The mechanics

What vesting a trust involves.

The deed sets a vesting date and a power to bring it forward. The trustee resolves to vest, identifies the beneficiaries entitled to the capital, distributes the assets in specie or sells them and distributes the proceeds, settles the trust's liabilities and its own indemnity, lodges the final return, cancels the registrations and, where the trustee is a company with no other role, deregisters it. A deed of vesting records the decision. The order of those steps decides the tax.

Capital gains tax

A vesting is a disposal, unless the roll-over applies.

Distributing an asset to a beneficiary is a capital gains tax event for the trust, and the beneficiary acquires the asset at market value. Under the Bill, a transfer to an individual between 1 July 2027 and 30 June 2030 can qualify for the roll-over on the same terms as a transfer to a company: the individual must have been a beneficiary and a family group member just before, all of the trust's assets must go, and the choice must be made on time. Whether a family prefers the roll-over, with its all-or-nothing condition, or an ordinary vesting with the discount preserved on gains accrued before July 2027, is a calculation to do before the first asset moves.

Victoria

Distributions to beneficiaries, and the section 36A conditions.

A distribution of Victorian land to a beneficiary in specie is a dutiable transfer unless section 36A of the Duties Act 2000 applies: the beneficiary was a beneficiary when the land was acquired, nothing is given for it, and duty was paid on the way in. A distribution to a beneficiary who was added to the trust later, or who takes the land subject to paying out a loan, is where the exemption is lost.

Stamp duty and land tax in Victoria

Loose ends

Loans, the trustee and the registrations.

Beneficiary loan accounts and unpaid entitlements have to be forgiven, paid or distributed before the trust can vest cleanly, and each has its own tax treatment. The trustee's right of indemnity has to be satisfied or released. The ABN, TFN and GST registrations are cancelled after the final return. A corporate trustee with nothing else to do is deregistered. Wills that referred to the trust are updated.

FAQs

Common questions.

Still unsure? Call us on (03) 9008 7224 and speak to a lawyer, not a call centre.

Is winding up cheaper than converting?

Usually, because there is no company to establish and run. The capital gains tax and duty on the distributions may be larger than on a roll-over into a company, which is the comparison to make.

Can the roll-over apply to a distribution to me personally?

Under the Bill, yes, within the window and subject to the continuity, all-assets and choice conditions. The asset then sits in your name at the trust's cost base, with the gain deferred.

What if the deed's vesting date has already passed?

Then the trust has vested whether or not anyone noticed, and the beneficiaries have held fixed entitlements since that date. That changes the tax position for every year since and is worth checking before anything else.

Trust tax changes

This page is general information about proposed Commonwealth legislation and current Victorian law. It is not legal or taxation advice and does not take your circumstances into account. The Bills may change before they are enacted, and some matters, including capital gains tax interactions, are to be dealt with in later legislation. Advice should be obtained before any election is made or any asset is transferred.

Page TT-09 · Trust tax changes · Last reviewed 27 October 2026

Vest the trust in the right order.

Start online and a CMK Legal structuring lawyer picks it up, or book a consultation and we will point you the right way the same business day.