Non-Business Trusts to Bear Most of Labor’s Proposed Trust Tax: Treasury

Treasury officials have informed a Senate inquiry that the majority of revenue from the government’s proposed tax on family trusts will stem from trusts not engaged in business operations. While approximately 40 percent of the anticipated revenue is expected from trusts that do operate businesses, the remaining revenue will come from trusts holding investments. A significant portion of the revenue from business trusts will originate from smaller businesses with annual net incomes under $1 million.

• The government’s proposed tax on family trusts would impose a 30 percent minimum tax rate on net income.
• This new tax is scheduled to take effect from July 2028.
• Treasury officials estimate that around 60 percent of the revenue will come from trusts that do not operate businesses.
• Trusts holding investments are a primary source of revenue for this new tax.
• About 40 percent of the revenue from business trusts is projected to come from businesses with annual net income below $1 million.