Why Some Australians Could Pay 3 Times More Tax Under Labor’s Trust Plan

A Senate inquiry has revealed that a small business owner earning $45,000 through a family trust might pay over three times more tax than an employee with the same income under Labor’s proposed trust tax. This issue was raised with Treasury officials, who acknowledged that in some scenarios, the opposite is true, but the specific gap highlighted is substantial. The Australian income tax system’s structure exacerbates this difference.

• A small business owner earning $45,000 via a family trust could pay more than three times the tax of an employee on the same income.
• This potential disparity was highlighted during a Senate inquiry examining Labor’s planned 30 percent trust income tax.
• Treasury officials confirmed the possibility of higher tax burdens for trust beneficiaries in certain situations.