I make $180k a year through my trust. How will the new tax affect me?

May 20, 2026 — 5:01am

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My wife and I are in our late 50s and operate a small business through our family trust. The profit is usually about $180,000 a year, and that’s distributed as $60,000 each to my wife, myself and our 19-year-old daughter, who is at university. How are we likely to be affected by the proposal to levy a flat tax of 30 per cent on family trusts?

You are likely to be hit hard. Under the present arrangements, you probably pay about $9000 tax a year each. That’s a total of $27,000 in tax if the money is distributed equally among the family. Under the proposed arrangements, the trust would cop a flat tax of 30 per cent, which would be $54,000, so your tax would effectively double.

There is no need for urgent action, as these changes are still two years away, but you will certainly need to discuss with your accountant the optimal structure. One possibility is to pay yourselves salaries of at least $45,000 each, bringing you up to the 30 per cent tax bracket.

The balance could then be paid as a trust distribution or contributed to superannuation, where it would only be taxed at 15 per cent. If you pay your daughter a wage, you will need to show that she genuinely earned it, with hours worked at market rates.

I am 76 and own a property in Sydney that was originally purchased by my parents for £2940 ($5880 at the time) from War Service Homes in 1955. Ownership passed to me in 2009 as part of my mother’s will and the market value for probate was $550,000. Its estimated value is now $1.9 million.

I own no investment properties or trusts. Will the budget affect me?

Paul BensonMoney contributor

My son lives in the........

© The Sydney Morning Herald