If there is a residential house owned by the trustee of a discretionary trust and if the house is provided rent free then are there any tax consequences? Generally not for income tax. There is no income of the trust so nothing to tax. The trust will not be able to claim any interest on any loans used to acquire the property, nor will it be able to claim any other expenses such as rates etc. There would generally be no Fringe Benefits Tax either as the benefit does not relate to employment. Miscellaneous Taxation Ruling MT 2016 Fringe Benefits Tax: Benefits not taxable unless provided in respect of employment at paragraph 2 states: An essential element of the definition of 'fringe benefit' is that the benefit must be one provided in respect of the employment of the employee. Unless a benefit is provided in the context of an employer-employee relationship the tax has no application. The property will be subject to CGT with no main residence exemption available. There may be land tax payable where there otherwise wouldn't be if the beneficiary owned the property. But this varies from state to state - there could be an exemption from land tax in VIC for example. In NSW land tax would apply. Under Trust Law a trustee may be in breach of their powers, and liable for the loss, if they are not expressly authorised to allow an asset to be used by a beneficiary for free.