There are a lot of people getting very angry about the government’s policy to limit the ability of discretionary trusts to reduce tax.

You can understand why. Discretionary trusts are tax arrangements where you put (usually) members of a family in it, and all of the income earned by that family then gets divvied up in a way that minimises the overall level of tax paid.

This is especially good when you have one person who makes most of the money in the family.

The Australian Financial Review, for example, had an article titled “How to stop your kids and grandkids being taxed like CEOs”, which really is giving the game away.

Use a family trust The big benefit of a family trust is that the trustee can choose how to allocate income distributions, says Viola Private Wealth’s (Peter) Nevill.........

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