Should some of Australia’s more than 1 million family and small business trusts face higher taxes in future, bringing them closer to what ordinary wage earners already pay in income tax?

We’re about to find out on Tuesday night.

Trusts are widely used by farmers, family businesses, professionals, property investors and high-income households because they can provide flexibility, asset protection and succession planning benefits. They can also be used to reduce people’s income tax.

Over recent weeks, there’s been mounting, well-sourced media speculation that the Albanese government will revisit a Labor policy from 2019 for a flat 30% tax on some trust payments.

Speaking at a national tax summit last year, leading tax researcher Miranda Stewart pointed out that while some Australians had the money and means to set up trusts to reduce their tax bills, “Your average punter is having tax taken out of their pay every fortnight”.

But what is a trust? What proposals for change are being seriously considered ahead of Tuesday’s budget? And which Australians are most likely to be exempt from any changes that may be on the way?

1.8 million Australians benefit from trusts

Some........

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