<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A question from an Australian family to a financial expert has sparked debate about the federal government's generational </span><a href="https://www.9news.com.au/national/federal-budget-2026-government-unveils-250-dollar-tax-relief-minimum-tax-on-wealth-trusts/885f4657-b89b-431d-8f0d-330459a1dfe9" rel="" target="_blank" title="trust tax reform."><span>trust tax reform.</span></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The couple, aged in their 50s, wrote to the </span><a href="https://www.smh.com.au/money/tax/i-make-180k-a-year-through-my-trust-how-will-the-new-tax-affect-me-20260519-p5zyl3.html?dicbo=v2-62eJLA4" rel="" target="_blank" title="Sydney Morning Herald's"><em><span>Sydney Morning Herald's</span></em></a><span> money expert Noel Whittaker and explained that their small business annual income, operated through a family trust, is split into three $60,000 streams, totalling $180,000.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>That money is then funnelled to the husband, wife and teenage daughter</span><strong><span>.</span></strong></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/melissa-caddick-con-woman-victims-share-small-pot-final-cash/eba54293-a47c-4d12-9e82-10dbffea4a6d" target="_blank"><strong><span>Con-woman Melissa Caddick's victims share 'small pot' last cash</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/household-debt-australia-why-we-feel-poor-despite-being-among-worlds-richest-countries/79fe0a69-9ec1-4094-b924-f02be903fc8c" target="_blank"><strong><span>Australia is one of the richest countries in the world. But household debt is making us feel 'poor'</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>"</span></strong><span>How are we likely to be affected by the proposal to levy a flat tax of 30 per cent on family trusts?" they asked.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The question posed to Whittaker was simple, but his answer may come as unwelcome news.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/national/family-trust-tax-question-money-expert-noel-whittaker/741478b4-e6d0-4d06-9e5c-4805707dc5d4" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"You are likely to be hit hard," he explained, adding that the couple likely currently pay just $27,000 in total tax on the distributed incomes.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Once Labor's tax laws come into effect in 2028, this tax will increase by 100 per cent.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Under the proposed arrangements, the trust would cop a flat tax of 30 per cent, which would be $54,000, so your tax would effectively double," Whittaker added.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"There is no need for urgent action, as these changes are still two years away, but you will certainly need to discuss with your accountant the optimal structure."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>There could be a small loophole that would allow the couple and their daughter to pay slightly less tax, but it involves slashing the incomes paid to $45,000 per year.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Whittaker said the remaining balance could be paid again as a trust distribution or a superannuation, where it would be taxed by just 15 per cent.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"If you pay your daughter a wage, you will need to show that she genuinely earned it, with hours worked at market rates," he added.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Commenters on Whittaker's column claimed this real-world example is "exactly" why the trust tax law reform was the right move.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Thank you first letter writer for illustrating exactly why the trust tax law needs overhauling. Fair go for all," one said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Noel's first example is the exact reason our government has decided to do the right thing and tax trusts," another added.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It's actually a funny name for something when you consider that none of us could trust what on earth goes on in them."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/bondi-beach-terror-attack-man-charged-with-stealing-victims-camera-equipment/3afc712c-b88d-459f-8ca9-e628b147103e" target="_blank"><strong><span>Man charged with stealing Bondi terror attack victim's camera</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><h3><strong><span>Explaining the 30 per cent trust tax</span></strong></h3></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Sweeping tax reforms to trusts were announced in the </span><a href="https://www.9news.com.au/federal-budget" rel="" target="_blank" title="2026 Federal Budget."><span>2026 Federal Budget.</span></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Discretionary trusts allow people – most often people and families with great wealth – to minimise their tax expenses by distributing income among their trustees.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Currently, income from discretionary trusts are taxed at the beneficiary's marginal rate.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The Albanese government will slap a 30 percent minimum tax rate on these trusts from July 1, 2028, to "improve the fairness of the tax system and help fund new tax cuts for workers".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The budget papers noted that around there were around one million trusts in Australia in the 2022-2023 tax year.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Families with discretionary trusts faced an average tax rate about 4 per cent lower compared to families on similar income, but who were without trusts.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The government claimed more than 90 per cent of private trust wealth belonged to the wealthiest 10 per cent of Australian households.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><em><span>The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.</span></em></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><em><span>NEVER MISS A STORY:</span></em></strong><span> </span><strong><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><strong><em><span>Download the 9NEWS App here via</span></em></strong><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" target="_blank"><strong><em><span>Apple</span></em></strong></a><span> </span><strong><em><span>and</span></em></strong><span> </span><a href="https://play.google.com/store/apps/details?id=nineNewsAlerts.nine.com&amp;hl=en_AU&amp;pli=1" target="_blank" title=""><strong><em><span>Google Play</span></em></strong></a></li><li><strong><em><span>Make 9News your preferred source on Google by</span></em></strong><span> </span><a href="https://9.nine.com.au/8x987w" target="_blank"><strong><em><span>ticking this box here</span></em></strong></a></li><li><strong><em><span>Sign up to</span></em></strong><span> </span><a href="https://login.nine.com.au/edm?client_id=nineatnine" target="_blank"><strong><em><span>our breaking newsletter here</span></em></strong></a></li></ul></div></div>