Will the earnings inside my trust still be taxed at 47 per cent?

June 17, 2026 — 5:01am

You have reached your maximum number of saved items.

Remove items from your saved list to add more.

I am interested in testamentary trusts and understand that, under the proposed changes, income distributed from a discretionary testamentary trust will be subject to a minimum tax rate of 30 per cent, regardless of the beneficiary’s personal tax rate.

What is unclear to me is how income retained within the trust will be treated. My understanding is that, under the current rules, undistributed trust income is generally taxed at the top marginal rate plus the Medicare levy. Will retained income in a testamentary trust continue to be taxed this way under the proposed changes, or are different rules expected to apply?

The short answer is yes. Income retained in a trust is generally taxed at the top marginal rate, currently 47 per cent including the Medicare levy. That applies to both family trusts and testamentary trusts, the latter being trusts created under a will.

Estate planning solicitor Rachael Rofe, who has met with Treasury on this issue, says the proposed 30 per cent minimum tax applies only to income distributed to beneficiaries, not income retained in the trust. Retained income would continue to be taxed at 47 per cent.

If the proposed changes proceed and income is distributed to an individual beneficiary, the trustee would pay tax at 30 per cent and the beneficiary would receive a credit for the tax already paid. If their personal tax rate is higher than 30 per cent, they would pay the difference. If it is lower, there would be no refund.

I’m in my 30s and Dad is gifting me $50,000. What should I do with it?

Paul BensonMoney contributor

That is the curious part. Although the measure has been described as targeting wealthy Australians, the additional tax burden........

© Brisbane Times