Tax crackdown on trusts, but will change hurt intergenerational wealth? | The Business | ABC NEWS
From July 1, 2028, income generated within a discretionary trust will be taxed at 30 per cent, with the tax paid out of the trust before it distributes payments to beneficiaries. The use has grown rapidly in the past 20 years. There are now more than 840,000 discretionary trusts making up the vast majority of more than 1 million registered trusts. About 350,000 active small businesses operate through a discretionary trust structure. The budget papers said most trust income flows to the top-earning 10 per cent of families, and about 90 per cent of total private trust wealth is held by the wealthiest 10 per cent of households (those with net worth above $2.3 million). The budget measure aims to stop some high earners from splitting income among beneficiaries, such as their spouse or their children, to take advantage of the tax-free threshold. But experts say it’s not just the ultra-wealthy that will be hit. Discretionary trusts, also known informally as family trusts, give businesses flexibility in income distribution. Experts say the change could result in more businesses restructuring as companies, but that by doing so, it will be harder to pass wealth between generations without facing tax implications. Some small business owners are also worried about their future under the new rules.
Subscribe: http://ab.co/1svxLVE
#ABCNEWS #ABCNEWSAustralia #ABCBusiness
