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FrankingFan(Initiate)Initiate
7 May 2026

We have a discretionary trust that holds income producing investments. We have a baby due in July 2026 (next financial year). Can some income be distributed to the unborn baby this financial year, and next year when they have a tax file number, can they complete their tax return for the previous financial year and receive franking credits? The crux of my question is, does the ATO consider a conceived baby to be a minor for the purposes of trust distributions or does the baby actually have to born first?

199 views
10 replies
199 views
10 replies

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Most helpful replyATO Certified Response

RachelATO(Community Moderator)Community Moderator
ATO Certified Response7 May 2026

Hi @lachlanjmcneill,


No, an unborn baby cannot receive a trust distribution. For tax purposes, a person must exist as a legal entity to receive income or trust distributions. This means the baby must be born before they can be a beneficiary entitled to receive trust income.


Once your baby is born in the 2025-26 financial year, they can become a beneficiary. However, they can't receive distributions for the current 2024-25 financial year.


After your baby is born and becomes a beneficiary, you'll need to be aware that different tax rules apply to minors receiving trust distributions. When a minor receives certain types of income from a trust, it may be taxed at higher rates unless it qualifies as excepted income. Franking credits attached to dividends distributed to minors are subject to specific rules, and they would need a tax file number to lodge a tax return and claim any entitlements.

All replies

Most helpful replyATO Certified Response

RachelATO(Community Moderator)Community Moderator
ATO Certified Response7 May 2026

Hi @lachlanjmcneill,


No, an unborn baby cannot receive a trust distribution. For tax purposes, a person must exist as a legal entity to receive income or trust distributions. This means the baby must be born before they can be a beneficiary entitled to receive trust income.


Once your baby is born in the 2025-26 financial year, they can become a beneficiary. However, they can't receive distributions for the current 2024-25 financial year.


After your baby is born and becomes a beneficiary, you'll need to be aware that different tax rules apply to minors receiving trust distributions. When a minor receives certain types of income from a trust, it may be taxed at higher rates unless it qualifies as excepted income. Franking credits attached to dividends distributed to minors are subject to specific rules, and they would need a tax file number to lodge a tax return and claim any entitlements.

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Can an unborn baby receive a trust distribution? | ATO Community