Family Trust Advice

03/09/2026

More Swiss Cheese moments

This article by The Australian Financial Review highlights some of the main features of the exposure draft legislation on the minimum tax on discretionary trusts, released by the Government today.

Included in the draft legislation is the choice for any discretionary trust that exists on 1 July 2028 to elect to make fixed distributions of trust income and capital from the 2027–28 and later income years to pre-nominated beneficiaries.

Making the election relieves the trust of paying the 30% minimum tax and undertaking what could be a messy and expensive restructure. Where a discretionary trust makes this election, the minimum tax does not apply.

But here’s the catch: if the trustee ever distributes other than in accordance with the nomination, the election is revoked, the nominated beneficiaries are treated as not being presently entitled to the income or capital, the trustee becomes liable to pay tax on all the net income of the trust for that income year, and the 30% minimum tax applies for all later years.

Certain companies and trusts will be eligible to be nominated, and there is no limit on the number of beneficiaries that can be nominated. Nominated beneficiaries could be added or changed only in the event of death or a relationship breakdown.

Other key points:
➡️ A 3-year CGT rollover would be available.
➡️ Charitable trusts and all distributions from trusts to registered charities and deductible gift recipients will be excluded from the minimum tax.
➡️ Distributions to income tax exempt entities, such as sporting clubs, up to a reasonable cap to be finalised following consultation.

Consultation is open until 18 September. The Government then intends to pass the measures into law before the end of this year.

Trustees can avoid paying the new minimum 30 per cent tax on discretionary trusts as well as stamp duty, under a new option that spares them from having to restructure.

23/05/2026

I'm genuinely alarmed that with the proposed Trust tax changes, the Government has cast the net far too wide. And the people who will pay the price are not high-income tax planners. They are widows, orphaned children, disabled beneficiaries, and vulnerable adults who rely on testamentary discretionary trusts for protection after losing a loved one.
This article is my attempt to explain why that matters — and why I think we all need to speak up before it's too late. 😡

When the 2026–27 Federal Budget introduced a 30% minimum tax on discretionary trusts from 1 July 2028, the headlines focused on wealthy families using trusts to split income and reduce tax. I understand why.

12/05/2026

Budget 2026

Based on the proposed measures announced in the 2026–27 Budget, a bucket company receiving a distribution from a discretionary trust would most likely still pay the normal corporate tax rate of 30% on passive investment income.

However, the critical issue is whether the new proposed “30% minimum tax” on discretionary trusts would apply before the distribution reaches the company.

At this stage, the budget draft details suggest:

* the trustee may pay a minimum 30% tax on distributions
* non-corporate beneficiaries receive a tax credit
* corporate beneficiaries may be treated differently, but Treasury has not yet released legislation clarifying this point fully

Most Likely Outcome Based on Current Information

Scenario 1 — Current Traditional Bucket Company Structure

Today:

* Trust distributes $100 to bucket company
* Bucket company pays 30% company tax
* Effective immediate tax = 30%

Additional tax only arises later if profits are paid out as dividends to individuals.

Under the Proposed Measures

The Government appears to be targeting situations where discretionary trust income is ultimately taxed below 30%.

Therefore, if:

* the trustee already pays 30%, and
* the corporate beneficiary also pays 30%

then applying both would create double taxation approaching 51%+ effective tax, which would be commercially unworkable and likely inconsistent with policy intent.

Example if no credit relief existed:

* Trust pays 30%
* Company receives remaining 70%
* Company taxed again at 30%
* Effective combined tax ≈ 51%

That outcome is widely considered unlikely because:

* company beneficiaries are already taxed at 30%
* bucket companies were already effectively operating at the proposed minimum rate

The More Probable Interpretation

The more likely design is:

* distributions to bucket companies will either:

* be exempt from the new minimum trust tax, or
* receive a credit/offset mechanism to avoid double taxation

If that occurs the effective tax rate remains approximately 30% inside the bucket company structure

Important Strategic Implication

If Treasury confirms bucket companies can still cap tax at 30%, then:

* bucket companies may become even more valuable
* distributing to adult children on low tax rates becomes less attractive
* discretionary trusts may evolve into quasi-company tax structures

But if anti-avoidance rules target corporate beneficiaries specifically:

* many existing trust structures may need restructuring before 1 July 2028.

At this stage, the legislation simply is not detailed enough to conclude definitively. The Budget announcement provides policy direction, but not the technical mechanics yet.

Family trusts will be whacked with a minimum 30 per cent tax from 2028 as the Albanese government takes a sledgehammer to vehicles used by the wealthy, in the name of creating a fairer system.

12/05/2026

Budget blow to Family Trusts

Labor will introduce a minimum 30 per cent tax on discretionary trusts from July 1, 2028, with some exceptions.

Trusts are used by families to split income and take advantage of the tax-free and lower-tax thresholds on income tax.

Under the new settings, trustees are required to pay the tax, and beneficiaries will need to declare the income in their tax returns.

Small businesses and other taxpayers will be given three years from July 1, 2027 to restructure out of discretionary trusts into companies or fixed trusts.

The minimum tax will not apply to other types of trusts, such as fixed trusts, super funds, deceased estates and charitable trusts.

Other exemptions include primary production income of farms and certain income relating to vulnerable young people.

Labor argues the change will ensure a fairer rate of tax is paid on income from discretionary trusts so it's more in line with rates paid by workers earning a wage.

The measure is expected to raise $4.5 billion over the next four years, with the extra revenue funding tax cuts for workers.

20/11/2024

ATO: Updated Information on family trusts concessions

The ATO has just released information on family trust concessions. This concessional treatment applies to some transactions where trusts have validly elected to become family trusts. The material includes information on: Family trust elections; Family control test; Family of the specified individual; Family group; Interposed entity elections; How to make, vary or revoke an FTE or IEE; Family trust distribution tax; and Trustee beneficiary non-disclosure tax on circular trust distributions.

https://www.ato.gov.au/businesses-and-organisations/trusts/in-detail/family-trusts-concessions?

Concessional treatment applies to some transactions where trusts have validly elected to become family trusts.

28/01/2024

The courts have been cautious in seeking to extend the concept of ‘property’ within the meaning of Family Law Act 1975 s 79 – particularly in the context of characterising the bare equitable rights of a spouse as beneficiary under a discretionary trust. Any comments?

It is uncertain when a court will find a spouse’s bare rights under a discretionary trust are capable of constituting property under s 79.

25/01/2024

Informative article. Avoid expensive mistakes. Any other tips?

Clients living through succession planning and/or family breakdown may be surprised to learn that the options for tax relief are limited. It probably comes as more of a surprise when they realise tax could become payable to the ATO even when no cash is exchanged between the parties. Enter the trust....

24/08/2023

Safeguarding Family Wealth: The Power of Trusts for Capital Preservation. https://www.investordaily.com.au/discover/53561-safeguarding-family-wealth-the-power-of-trusts-for-capital-preservation

Establishing a trust allows families fortify their financial security, facilitate a seamless transfer of wealth, and create a lasting legacy for future generations. Body: Preserving and protectin

02/02/2023

This blog from Michelle Miller is about a trusts and Centrelink. With a read when thinking about our estate.

I’ve been reading decisions of the Administrative Appeals Tribunal ( www.aat.gov.au ) for a while, and decided that I should write those up both for my own benefit but also to share with others. This article reviews the attempts of Johann Hoefl to secure an age pension payment, and how a private t...