Business · Economy · 2 hrs ago
Lawyers warn Australian trust tax could force millions to change wills
Australia's Labor government has proposed a 30% minimum tax on some trusts, with legislation tabled in parliament this week.
The government says testamentary trusts—set up through a will and activated after the holder dies—will be exempt if their beneficiaries are individuals, charities or special disability trusts.
Estate lawyers warn that many existing trusts also name companies or other trusts as beneficiaries, which could put them outside the exemption.
They say families may need to redraw their wills to qualify, even when the trusts were set up to support children or people with disabilities.
One lawyer said about 90% of the wills she drafted included testamentary trusts, and that many clients were not wealthy.
The dispute matters because lawyers say the rules could create broad costs and changes for ordinary families, not just wealthy trust holders.
The legislation is expected to pass by the end of the year, while the Greens have left open the possibility of supporting it.
Estate lawyers warn that proposed Australian trust tax changes could force millions of people to redraw their wills.
The legislation would impose a 30% minimum tax on some trusts, while testamentary trusts are exempt only if their beneficiaries are limited to individuals, charities and special disability trusts.
Lawyers say many testamentary trusts include companies or other trusts and could therefore miss the exemption.
They say the changes may affect wills made over the past 30-plus years, including those of people who are not wealthy.
Treasurer Jim Chalmers has said the reforms will not significantly affect testamentary trusts.
- Who
- Australian estate lawyers, including Matthew Burgess and Kimberley Martin, are warning about the proposed changes. The Albanese government is proposing them.
- What
- Lawyers say the trust tax could require many people to redraw their wills to qualify for an exemption.
- When
- The legislation was tabled in parliament this week and is due to pass by the end of the year.
- Where
- Australia.
- Why
- Lawyers say testamentary trusts with companies or other trusts among their beneficiaries may fall outside the proposed exemption.
Estate lawyers
Australian government
Impact on testamentary trusts
Estate lawyers
Lawyers say many such trusts could be affected because they include companies or other trusts as beneficiaries.
Australian government
Chalmers says the reforms will not significantly affect testamentary trusts, which are excluded if beneficiaries are limited to individuals, charities and special disability trusts.
Need to change wills
Estate lawyers
Lawyers say people may need to redraw wills to secure the exemption.
Australian government
The government has said it will exclude testamentary trusts from the 30% minimum tax.
Chalmers revealed that retirement living and aged care would be excluded from negative gearing changes.
Labor tabled its trust legislation in parliament.
The legislation is due to pass.
- Proposed minimum tax
- 30%
- Testamentary trust exemption
- Beneficiaries limited to individuals, charities and special disability trusts
- Potentially affected wills
- Wills drafted over the past 30-plus years
- Martin’s wills
- About 90% contained testamentary trusts
What people are saying
The government has turned an anti-avoidance measure into a nationwide business-restructuring and will-redrafting exercise.
These are not people who are trust moguls or people who have lots and lots of money.
If anyone has a proper testamentary trust, they will definitely have to change it.
Either one of those is not a great outcome for ordinary Australians.