With all the chat on CGT, no one talking about the 30% Trust Tax?
Proposed 30% Trust Tax:
- Effective Date: Starts 1 July 2028 (2028-29 income year).
- Target: Applies to discretionary trusts (family trusts).
- Mechanism: Trustees pay a minimum 30% tax on the taxable income of the trust. Non-corporate beneficiaries receive non-refundable tax credits for the tax paid by the trustee to avoid double taxation.
- Impact on Beneficiaries: Beneficiaries with marginal tax rates below 30% will not get a refund for excess credits; those above 30% will pay top-up tax.
I purchased property and shares under a trust for my retirement (no need to negatively gear) and to partly fund my retirement when I stop working.
Between my wife and myself, from the rental/dividend income I was hoping to stay in the 0 or 15% tax bracket (which is what it would be if the properties were our names) but under the proposed rules, we would pay a flat 30% tax in rent/dividends in retirement.
Edit. Looks like I jumped the gun
ATO will allow you to rollover to another entity without CGT if you do it within 3 years.
However we don’t know if stamp duty will apply.
what i think:
When an average person sets up trusts etc instead of simpler methods, such as purchasing property and shares in their own name and making smaller reasonable personal investments, the government may view those as sophisticated investors. As a result, they need to be punished to higher taxes for the benefit of society.
/s