The Tax Office has recently increased scrutiny of Family Trust distributions to adult children (>18-year-old child) to ensure the child receives the financial benefit and enjoyment of the funds. This means paying the money directly to the beneficiary; OR A beneficiary repaying their parent their holidays, school fees, HECS, Cars etc). To facilitate this process a parent can pay child costs directly from the Family Trust bank account which is recorded “as a loan to the child”. This loan can subsequently be repaid in later years via future family trust distribution of income to the “adult child”. This process whilst means using family trust cashflow, will ensure the tracing of family trust income and expenses much easier should it be needed.