How to Set Up a Charitable Trust in Australia - A Step‑by‑Step Guide

Oct, 11 2025

Thinking about turning your passion for a cause into a lasting legacy? A charitable trust is a legal structure that lets you lock away assets for a specific charitable purpose, while giving you control over how the money is used.

Setting one up in Australia may sound daunting, but if you follow the right steps, you’ll have a solid framework that satisfies the Australian Taxation Office (ATO) and the Australian Charities and Not‑for‑profits Commission (ACNC). Below is a practical roadmap that walks you from the initial idea to a fully registered trust.

1. Clarify Your Purpose and Beneficiaries

Before you draft any paperwork, write a clear statement of what your trust will achieve. Are you funding scholarships, supporting a medical research centre, or providing housing for homeless families? This purpose will shape every later decision.

In micro‑terms, the people or organisations that will receive the trust’s benefits are the Beneficiary. Make a list, describe how they’ll be selected, and decide whether the trust will serve a single group or a rotating pool of charities.

2. Choose the Right Type of Trust

Australia offers several trust structures, but the two most common for philanthropy are:

• Discretionary charitable trust - trustees decide how to distribute income each year.
• Fixed‑purpose charitable trust - the trust deed specifies exact uses for the assets.

Pick the model that matches how hands‑on you want to be. Discretionary trusts give flexibility; fixed‑purpose trusts provide certainty for donors.

3. Appoint Trustees and Define Their Duties

The people who will run the trust are the Trustees. Legally, you need at least one trustee, but a committee of three to five people is advisable for balance and credibility.

Each trustee should understand their fiduciary duties: act in the trust’s best interest, avoid conflicts of interest, and keep proper records. Draft a simple governance charter that outlines meeting frequency, decision‑making processes, and succession plans.

4. Draft the Trust Deed

The Trust Deed is the foundation document. It must contain:

1. Trust name (must include the word “Trust”).
2. Charitable purpose (as defined in step 1).
3. Names of the initial trustees.
4. Rules for appointing or removing trustees.
5. Beneficiary criteria and distribution mechanisms.
6. Power to amend the deed, if desired.

While templates exist online, it’s wise to have a qualified Legal Advisor review the draft to ensure compliance with the **Trusts Act 1973 (Cth)** and relevant state legislation.

5. Fund the Trust

Once the deed is signed, you need to transfer assets into the trust. Common contributions include cash, property, shares, or even intellectual property rights. Keep a detailed ledger showing the date, asset type, and valuation.

For tax‑effective giving, consider applying for **Tax‑Deductible Gift Recipient (TDGR)** status. A trust that qualifies can issue tax‑receipted donations, making it attractive for future donors.

6. Register with the Australian Charities and Not‑for‑profits Commission (ACNC)

Every charitable trust must be listed on the ACNC register. The application requires:

• Copy of the signed trust deed.
• Details of trustees and their consent.
• Proof of charitable purpose (e.g., supporting a registered charity or public benefit).
• Financial plan for the first three years.

The ACNC will issue an **ABN** (Australian Business Number) and a **Charity registration number**. This step also triggers the need to report annually to the ACNC, including financial statements and activity reports.

7. Notify the Australian Taxation Office (ATO)

With ACNC registration in hand, you must inform the Australian Taxation Office to obtain the TDGR endorsement and, if applicable, GST registration.

Key ATO filings include:

• Business Activity Statement (BAS) - quarterly if the trust is GST‑registered.
• Annual income tax return - trusts lodge a “trust tax return” (Form T). Revenue is taxed in the hands of beneficiaries, not the trust, provided it complies with the “income‑splitting” rules.
• Quarterly or annual reporting for any fringe benefits.

8. Set Up Ongoing Administration and Reporting

Running a charitable trust isn’t a one‑off task. You’ll need a routine to keep everything compliant:

Key Ongoing Requirements for a Charitable Trust

Requirement	Who is Responsible	Frequency
Update ACNC annual information statement	Trustees	Yearly
Prepare financial statements and audit (if >$250k)	Accountant / Treasurer	Yearly
Lodge BAS and PAYG instalments	Trust’s tax agent	Quarterly
Review beneficiary eligibility	Trustees	As needed / per distribution
Maintain trust deed and governance documents	Legal Advisor (review)	Every 2‑3 years or when changes occur

Document everything: meeting minutes, decisions, and any changes to the deed. Good records protect the trust’s tax status and build donor confidence.

Quick Checklist Before You Submit Anything

• Clear charitable purpose written in plain language.
• At least one qualified trustee willing to sign the deed.
• Signed trust deed that meets state law requirements.
• Initial funding with proper valuations.
• ACNC registration (ABN, charity number).
• TDGR endorsement from the ATO (if you want tax‑deductible receipts).
• Set up accounting system for BAS and annual tax return.

Common Pitfalls and How to Avoid Them

Vague purpose: If the deed says “help people” the ACNC will reject it. Be specific - e.g., “provide vocational training to unemployed youth in Melbourne”.

Insufficient trustee expertise: Mix financial, legal, and sector knowledge. A trustee without any accounting background can cause tax filing errors.

Missing deadlines: The ACNC requires the annual information statement within 28 days of the financial year end. Set calendar reminders.

Incorrect tax treatment: Trust income must be distributed to beneficiaries who then claim it on their tax returns. Forgetting to issue distribution statements can trigger penalties.

Next Steps After Registration

Now that the trust is legal and tax‑ready, focus on impact:

• Develop a grant‑making policy that aligns with the charitable purpose.
• Build a donor base - highlight the TDGR status in fundraising materials.
• Measure outcomes: track how many people are helped, what projects are funded, and report back to the ACNC.

Regularly review whether the trust’s structure still serves its mission. If your goals evolve, you can amend the deed (subject to trustee and ACNC approval).