By Picture a Kew anaesthetist and her partner, a commercial barrister, sitting at the kitchen table in October with their accountant’s email open. Their family trust has quietly done its job for 15 years. It’s paid for school fees, built up a share portfolio and spread income around the household. Now a proposed 30% minimum tax on trust distributions has them asking financial planning specialists whether the structure still makes sense. For families who rely on wealth management in Melbourne or other big cities to protect what they’ve built, it’s a reasonable question. It also comes with a deadline. Here’s what financial advisors for high income earners say.
Why trusts have worked so well until now
A discretionary trust lets the trustee decide each year which beneficiaries get income. A spouse on a lower income or an adult child at university might pay far less tax than a professional earning well over $190,000, who pays 45% plus the 2% Medicare levy. That gap is why trusts became so popular.
ATO taxation statistics show more than a million trust returns lodged each year, and discretionary family trusts make up most of them.
The idea of a flat minimum rate isn’t new. The Ralph Review of Business Taxation floated taxing trusts like companies back in 1999, and the debate has returned many times since. What’s changed is that the policy now looks real.
What the proposed 30% tax means in practice
Under the reported proposal, distributions would effectively pay at least 30 per cent, so sending income to a low-earning beneficiary would save far less. For a household distributing $200,000 a year across several family members, the yearly saving could shrink sharply.
Some caution is needed here. As of late October 2026, the final design, start date and transition rules depend on legislation, and details can change before Parliament passes anything. Anyone acting on early reports should check the current position with a registered tax agent or financial planning specialist first.
The options going forward
Media coverage points to a limited window where restructuring could be done on better terms. Here are the most common paths:
- Keep the trust. Asset protection, flexible estate planning and capital gains treatment can still justify it, especially where the 50% CGT discount applies to assets held for more than 12 months.
- Use a corporate beneficiary. Sending income to a company taxed at 30% (or 25% for eligible base rate entities) has long been popular. It brings Division 7A loan rules and extra admin costs, though.
- Move assets out. Transferring property or shares from the trust can trigger capital gains tax and, in Victoria, land transfer duty. Those up-front costs can wipe out years of future savings.
- Lean on super. Concessional contributions, capped at $30,000 a year, are taxed at 15%. For many high earners, that’s still the most tax-effective place for extra savings.
What do financial advisors for high income earners recommend?
Good financial planning advice starts with numbers, not gut feel. Put the costs of each option side by side over ten years, including duty, CGT, accounting fees, and the tax saved. Ask about the tax integrity program. Then look at what the trust does outside of tax. For a surgeon worried about litigation, asset protection may matter more than the rate. For a couple planning to pass assets to their children, the trust’s role in their estate plan could tip the balance.
Making the right call on family trust tax with wealth management in Melbourne
Back at that kitchen table, the anaesthetist and the barrister don’t need a dramatic overhaul. They need a clear comparison, sound legal advice on their deed and a decision made well before any transition window shuts. That’s the real value of good wealth management in Melbourne: calm, well-costed choices instead of reacting to headlines. Trusts aren’t dead, but autopilot is. Families with financial advisors for high income earners can review their structure now, with up-to-date tax and legal advice, will be in the best position whatever the final law says. This article is general information only and doesn’t take anyone’s personal circumstances into account. Tax law and proposed changes may differ from what’s described here, so readers should get personal financial planning advice before acting.