Discretionary trusts: What the proposed changes mean

Family trusts have long been a popular structure for managing business income, investments and succession planning. However, a major change is proposed from 1 July 2028, with the Federal Government planning to introduce a 30 per cent minimum tax on discretionary trust income and reduce some of the tax advantages these structures have traditionally offered.i

Treasury estimates there are approximately 840,000 discretionary trusts in Australia and around 350,000 active small businesses operating through these structures.ii

The proposal, outlined in a consultation paper, is that from 1 July 2028, trustees will pay 30 per cent tax at trust level before distributions to beneficiaries.iii

Because the trustee-paid tax credits would be non-refundable, individual and other non-corporate beneficiaries generally would not be able to reduce the tax on discretionary trust income below 30 per cent, even if their personal tax rate is lower.

Proposed exemptions

A number of entities are exempt, with fixed and widely held trusts, complying superannuation funds, charitable trusts, deceased estates and special disability trusts, all excluded. Testamentary trusts established for genuine testamentary purposes are also exempt.

Certain types of income (such as primary production income, select income for vulnerable minors and amounts already subject to non-resident withholding tax), are also excluded from the new rules.

Until the final legislation is released, key questions are yet to be clarified about calculation of taxable income, treatment of capital gains, franking credits and carried-forward losses.

Trustee-level tax changes the mechanics

Under the proposed rules, trustees would pay the 30 per cent tax upfront and beneficiaries would receive a tax credit for their share of that tax. Beneficiaries would still need to include their trust income in their tax returns, but the way the tax is collected would change.

Trustees will be required to calculate, report and pay the minimum tax and notify beneficiaries of their entitlements and associated tax credits.

Tax offsets for beneficiaries

Individual and other non-corporate beneficiaries will receive a non-refundable tax offset for the tax paid by the trustee and will be required to declare their trust income in their tax return.

Corporate beneficiaries, however, will not be able to claim credits for tax payable by the trustee. This is designed to ensure the minimum tax cannot be avoided by cycling income through a ‘bucket’ company set up simply to receive discretionary trust distributions.

As currently proposed, distributions to corporate beneficiaries could be subject to tax at both the trust and company level because corporate beneficiaries would not receive a tax credit for trustee-paid tax. Treasury is still consulting on aspects of this treatment.iv

Restructure options

For small businesses and other taxpayers wishing to restructure out of a discretionary trust into another arrangement, expanded relief from income tax consequences (including capital gains tax) will be available for three years from 1 July 2027 to 30 June 2030. The relief is an expanded version of the existing Small Business Restructure Roll-over.v

For small businesses wishing to reduce the impact of the new rules, there are other alternatives to consider, including employing beneficiaries working in the business rather than paying them trust distributions. Salary or wage payment to employees will not attract the minimum tax.

Restructuring into a company would allow you to access dividend imputation and the lower 25 per cent corporate tax if your aggregated annual turnover is less than $50 million.

What are the implications?

While no immediate action is recommended before the legislation is finalised, business owners and investors should begin assessing how the proposal could affect their current structure and whether alternative arrangements may be worth considering.

For many families, discretionary trusts will continue to provide valuable asset protection and succession planning benefits, even if some of their tax advantages are reduced.

If you would like help understanding how the new rules will affect your trust, contact our office today.

i Tax reform | ATO
ii Minimum tax on discretionary trusts factsheet | Federal Budget papers
iii Minimum tax on discretionary trusts | Consultation Paper
iv Deloitte | tax@hand
v Small business restructure roll-over | ATO

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RBA Announcement – August 2026

At its meeting this month, the Board decided to leave the cash rate target unchanged at 4.35 per cent.

Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of the increase reflected greater capacity pressures.

Short-term measures of inflation expectations have eased but remain higher than earlier in the year.

Please click here to view the Statement by the Monetary Policy Board: Monetary Policy Decision. Please get in touch if you would like to discuss recent rates or if you would like to review your finance options.

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Preparing your business for the new financial year

Every new financial year comes with a list of must-do tasks, but 2026-27 is bringing  a range of fresh challenges for SMEs arising from the start of Payday Super and  major changes announced in the May Federal Budget.

Following the global trend, the Budget made it clear that tax integrity and transparency is now a key issue, so SMEs need to ensure their tax structures have genuine commercial purpose and are justifiable.

This was further emphasised by the additional $700 million in compliance funding the ATO received for increased audits, data matching and greater scrutiny.i

Practical implications of the Federal Budget

The Budget reforms mark a significant change to the way many businesses have been operating and will require careful reassessment of everything from business structures to the way income is distributed to owners.

The reform requiring the most urgent attention is replacement of the existing 50 per cent CGT discount with inflation-adjusted indexation and introduction of a 30 per cent minimum tax rate for real capital gains from 1 July 2027.ii

Assets purchased and sold before 1 July 2027 will still be taxed under the existing rules, with capital gains made prior to 30 June 2027 calculated under the old rules.

The new rules apply to individuals, trusts, partnerships and companies and affect all CGT assets (including property and shares), managed funds, business assets and private company interests.

A key point to note is the new CGT rules do not impact availability of the four special CGT concessions available when owners exit a SME.

And, following many protests in the wake of the Budget, the government announced further CGT concessions for small businesses.iii

The turnover threshold for the 50 per cent active asset CGT reduction  increased from $2 million to $10 million from 1 July 2027.

Family trusts face tax changes

SMEs using discretionary (family) trusts for income splitting, asset protection and estate planning will need to review the new rules covering these structures, as they may now be less attractive than in the past.

From 1 July 2028, a new 30 per cent minimum rate on the taxable income of discretionary trusts will be introduced.

Trustees will pay the tax at trust level prior to distribution to beneficiaries, with non-corporate beneficiaries receiving non-refundable tax credits for the tax payments.

SMEs currently using these structures should consider whether their trust remains appropriate and if not, begin planning how to restructure into a new vehicle. The government is providing a rollover relief window from 1 July 2027 to 30 June 2030 for trust users restructuring into a company or fixed unit trust.

Meanwhile, since the Budget, the government has announced a carve out for testamentary trusts, exempting them from the minimum tax requirements.iv

The Federal Government recently announced a ban for Self-Managed Superannuation Funds (SMSFs) from using Limited Recourse Borrowing Arrangements (LRBAs) to purchase residential property in the future. Existing LRBAs are not affected.

Change to negative gearing rules

Another Budget change requiring attention relates to negative gearing for residential property investments, which will be limited to new builds from 1 July 2027. Arrangements remain unchanged for assets owned prior to 7.30pm on Budget night.v

Under the new rules, losses from residential property investments can only be offset against residential rental income or capital gains from residential property, not wages or other income. Excess losses can be carried forward.

While residential property investments you hold will be impacted, commercial property, shares and non-residential assets can still be negatively geared.

Payday Super arrives

This financial year represents the first year SMEs will be dealing with the new Payday Super rules.

The key implication relates to business cash flow, particularly if your business has previously been making Super Guarantee contributions quarterly and holding these funds to boost the business’s cash position prior to payment.

SMEs need to ensure they meet the new reporting requirements introduced as part of Payday Super to avoid compliance problems with the ATO.vi

Instant asset write-off change

One of the good news stories from the Budget is the popular $20,000 instant asset write-off is permanent from 1 July 2026.vii

SMEs can now be certain the concession is available and can plan business expenditure accordingly.

Small businesses with an aggregated turnover up to $10 million can immediately deduct eligible assets costing less than $20,000.

If you have any questions, contact our office today. i Federal Budget 2026 | Corrs Chambers Westgarth
ii Small business explainer | Treasury.gov.au
iii,iv Tax reform implementation for small business and startups | Prime Minister of Australia
v Tax reform for workers, businesses and future generations | Prime Minister of Australia
vi Our compliance approach for Payday Super | Australian Taxation Office
vii Tax reform | Budget 2026–27

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Tax-deductible expenses for sole traders to watch for

Are you a sole trader? Here are some tips on deductible expenses to watch for.

If you haven’t spoken to us or your bookkeeper about EOFY matters yet, it might be a good idea to give us a call.

After all, you’ve done the thinking and the work, and are probably desperate to keep a little more of that hard-earned profit. However, being self-employed, you must first understand the nature of your expenses.

What deductions can I claim as a sole trader?

You can claim expenses that are directly related to earning your taxable income. Private and personal expenses, such as after-school care or home loan interest payments, cannot be claimed.

The expenses you can claim — and when you claim them — depends on the type of asset purchased or service engaged. Operating expenses for a sole trader can usually be claimed in the year they occur, while capital expenses must be claimed over time.

Business vs personal expenses

Expenses that are usually not deductible

  • Entertainment expenses
  • Traffic fines
  • Private or domestic expenses, such as childcare fees or clothes for your family
  • Expenses relating to earning income that is not assessable, such as money you earn from a hobby
  • The GST component of a purchase if you can claim it as a GST credit on your business activity statement

Expenses that may be deductible

  • Wages
  • Office stationery
  • Computer or laptop that is used for business
  • Machinery and equipment
  • Motor vehicle expenses
  • Advertising
  • Business travel
  • Bills, like insurance and phone

How can a sole trader pay less tax?

1. Claim operating expenses when you incur them

Operating expenses are also called revenue expenses because they help generate income, and they can be claimed in the financial year you incur them. Examples of claims that can be made in the year they are incurred include:

  • Salaries, wages, overtime payments, allowances and bonuses
  • Advertising and promotional expenses
  • Electricity, phones, gas and stationery
  • Business travel costs
  • Asset maintenance and repair costs
  • Parking fees (but not fines)

2. Prepay some expenses this year to reduce taxes

Pay in advance and bring the deduction forward to this year. If you have a healthy cashflow, you can prepay your:

  • Business loans (prepay on fixed rates 12 months in advance)
  • Office and equipment lease payments
  • Business insurance
  • Business related subscriptions
  • Business travel, seminars and conference bookings
  • Telephone and IT services

Tip: Two birds with one stone — See if you can combine the benefit of bringing forward the tax deduction and getting a discount for paying your supplier in advance.

For every small business looking for a tax deduction, there will most likely be a service provider or salesperson looking to boost their sales results before June 30.

3. Consider capital expenses (asset purchases)

It’s important to mention that a small business that purchases an asset costing less than $6500 can still claim 100 percent of the cost in the actual year the expense is incurred.

Even if you have not paid for the item yet, sole traders can still claim as long as you are invoiced before 30 June.

Larger capital acquisitions that have an expected life longer than one year, such as IT servers, vehicles and expensive plant and equipment, must be claimed over a number of years.

These items are claimed via accelerated depreciation of the capital value, with 15 percent claimed in the first year (even if purchased in the last month of the year) and 30 percent each year thereafter.

Examples of capital expense assets that must be depreciated over time include:

  • Motor vehicles
  • Computers, servers, printers and copiers
  • Office and warehouse fixtures and fittings
  • Plant and equipment

4. Claim the instant asset write-off

Sole traders are eligible to claim the instant asset writeoff, which allows small businesses to claim immediate deductions for new or second-hand plant and equipment asset purchases like cars, office equipment and tools.

Before making any big purchases, check the instant asset write-off eligibility criteria and threshold, because these can change. Check your business’s eligibility and apply the correct threshold amount depending on when the asset was purchased, first used or installed ready for use.

Check the ATO website for the latest information on thresholds.

5. Bite the bullet and write off any bad debts

A bad debt is a taxable sale you made that has been unpaid for 12 months or more, with no chance of it being recovered.

You must keep written notes that the debt has been written off and why. Discuss this with your accountant, as there may be GST consequences.

6. Use concessional contributions to superannuation

Make sure to use your own superannuation allowance of up to $25,000 for those under 60, and $35,000 for those over 60.

Remember that if your spouse works in the business even part-time then you can still contribute up to their limit, but make sure to allow for any employer contributions from other jobs.

7. Do a stocktake

It might be time to call in the kids, parents and friends to help you identify damaged and/or obsolete stock items that can be written down in value or written off completely.

This reduces the value of your trading stock and, as a result, lowers your taxable business profit.

8. Be sensible

As a sole trader, your focus should be on managing your tax and not looking at measures that will put your business under cash flow pressures in the coming years, just to achieve a short-term tax advantage.

Buying unnecessary assets, upgrading cars or paying higher super contributions are pointless if it means your business will face cash flow issues.

As you enter a new financial year, consider speaking to us about whether you should be moving to a corporate structure going forward.

There’s an app for that

You’re not just a sole trader or freelancer, you’re the finance department, marketing head, coffee runner and admin ninja. If finance isn’t your forte, hand over the reins and let tech play CFO.

The app Solo by MYOB can help you automate GST, track expenses​ and prep your business for tax time. You can even download reports from Solo to share with us or your bookkeeper. Translation: less stress, more doing the work you love.

Source: MYOB
Reproduced with the permission of MYOB. This article by MYOB Subject Matter Experts was originally published at https://www.myob.com/au/resources/post/taxdeductible-expenses-for-sole-traders-to-watch-for
Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.
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Investing for the next generation

For many, the goal of investing is about creating wealth for a comfortable financial future, as well as a legacy that supports your children and grandchildren for decades to come.

But one of the greatest risks to that legacy can be the challenge of dealing with sudden wealth. When adult children inherit large sums or significant assets without preparation, sometimes the result is family tension, poor decisions or erosion of wealth.

While precise figures vary, research and industry experience consistently show that many families struggle to preserve wealth beyond the second and third generations, largely due to behavioural and governance challenges rather than investment performance.

Building financial literacy

Financial capability is developed over years of exposure, education, and experience.

The Australian Securities and Investments Commission (ASIC) MoneySmart program emphasises that financial literacy is a core life skill, not simply a technical ability.

While an inheritance may be some years off, parents who are expecting to pass on some form of an inheritance, should begin involving their children in financial discussions where appropriate. This might include reviewing investment portfolios together, explaining the complexities of how superannuation works or discussing the rationale behind major financial decisions. Understanding how risk is associated with investing, and ongoing tax obligations is also essential to create the whole picture.

Practical experience is just as important as theory. Allowing adult children to manage a portion of investments, under guidance, can build confidence and accountability. This phased approach reduces the risk of overwhelm later, when financial responsibility increases significantly.

Gifting or loaning?

Another important consideration when supporting the next generation is whether to provide financial assistance as a gift or a loan. The decision has both ethical and practical implications.

Gifting can provide immediate support without the burden of repayment, allowing children to purchase a home, invest or establish a business. But unequal gifting among siblings may create perceptions of favouritism, even if the intention is fair. Clear communication and documentation of the reasoning behind decisions is essential.

Loaning, on the other hand, can maintain a sense of responsibility and fairness.

Loans structured with clear terms can encourage financial discipline and avoid creating dependency. Families often formalise the arrangements with written agreements that set expectations for repayments and interest. There are also taxation and legal considerations.

The Australian Taxation Office may assess certain arrangements differently depending on whether funds are genuinely gifted or loaned. Professional advice ensures that intentions are reflected correctly. Ultimately, the choice between gifting and loaning may come down to the financial maturity of the recipient and your estate plan.

Preparing the next generation beyond money

Financial preparation alone is not enough. Inheriting wealth also involves emotional and behavioural readiness.

Open conversations about wealth, values and expectations are important. This includes explaining the purpose of wealth, whether it is to provide security, support philanthropy or create opportunities for future generations.

Governance structures, such as family meetings, investment committees or advisory boards can also help heirs understand their roles and responsibilities and encourage collaboration.

Philanthropy is another powerful tool for preparing heirs. Involving children in charitable giving decisions can instil a sense of social responsibility. It reinforces the idea that wealth is not solely for personal use, but also a resource to benefit the broader community.

Managing the transition

Gradual transition strategies can ease the adjustment for both parents and children.

This might involve progressively transferring control of assets. For example, adult children may first participate in decision-making, then take on increasing responsibility for managing investments over time. Trust structures are often used for staged distributions, allowing flexibility and protection.

Regular reviews are equally important. As family circumstances change, so too should the plan. Marriage, divorce, business ventures or health issues can all affect how wealth should be managed and transferred.

A legacy of capability

Successful intergenerational wealth transfer is not measured by the size of the inheritance but by the preparedness of those who receive it. Financial literacy, decision-making and open communication are the foundations of lasting wealth. By investing time in educating and including the next generation, families can reduce the risks associated with sudden wealth and create a legacy that endures.

If you’d like to discuss how to prepare your family for a successful wealth transition, we’re here to help.

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Smart tax and super planning before EOFY

Tax time is just around the corner, so now is the time to make sure you’re prepared for 30 June.

Each year, the ATO highlights its areas of focus. Taking a few minutes now to review these can help you avoid issues when lodging your return.

Work-related deductions under scrutiny

This year, the ATO is focusing on work-related deductions and income that’s not declared on tax returns.

If you are claiming work-related expenses, ensure they meet the ATO’s three golden rules:i

  1. The expense must be directly related to earning your income
  2. You must not have been reimbursed
  3. You must have records to support your claim, such as receipts or a logbook

For working from home expenses, you can use either the actual cost method or the fixed rate method.

Instant asset write-off

The instant asset write-off remains an important tax concession for Australian small businesses in the 2025–2026 financial year. Eligible businesses with an aggregated turnover of less than $10 million can immediately deduct the business portion of eligible assets costing less than $20,000, instead of depreciating them over several years. The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026.ii

Don’t overlook income

The ATO is also paying close attention to undeclared income. This includes:iii

  • Cash payments
  • Interest income
  • Rental income
  • Earnings from crypto assets

For those with a side hustle, check whether it may be considered a business. All business income, regardless of amount, is assessable and must be declared.iv

If you intend to claim deductions for business expenses related to your side hustle, ensure they are directly connected to earning that income and are supported by receipts.

Time for a portfolio review

Recent market volatility makes this a good time to review your investment strategy.

Checking your capital gains or losses before 30 June allows you to take action where appropriate.

For example, you may consider realising capital losses to offset gains from assets such as shares, property or crypto.

Tax timing strategies

If you have regular deductible expenses, such as investment loan interest or annual costs, it may be useful for some to prepaying them before 30 June to claim a deduction for this financial year.

You may also consider the timing of income expected before 30 June. Deferring income until after the end of the financial year may help reduce your tax liability.

Tax rates are also changing for lower income earners. From 1 July 2026, the rate for income between $18,201 and $45,000 will reduce from 16 per cent to 15 per cent, with a further reduction to 14 per cent the following year.

Super contribution strategies

The end of the financial year is an ideal time to review your super contributions.

If you plan to contribute before 30 June, check when your employer will make their contributions. The introduction of Payday Super means some employers are contributing earlier, which may affect your contribution caps.

For SMSF members, make sure that:

  • All contributions are received by the fund’s bank account by 30 June
  • Minimum pension payments are made
  • Asset valuations are up to date
  • Fund records are current

Be alert for tax time misinformation

The ATO is warning taxpayers to be cautious about the growing wave of tax “tips”, shortcuts and refund claims circulating online.

Content from social media, “finfluencers” and even artificial intelligence tools can sound convincing, but it is not always accurate or relevant to Australian tax law. Acting on this kind of advice can lead to incorrect claims, delays in processing returns and, in some cases, penalties.

Larger refunds, easy deductions or so-called “loopholes” should always be checked against trusted sources.

Ultimately, you are responsible for the accuracy of everything included in your tax return, regardless of where the advice came from.

Taking a few extra minutes to verify information before you lodge can help you avoid costly mistakes and keep your return on the right side of the rules.

Please get in touch if you need any help preparing for the end of the financial year.

Source: https://www.ato.gov.au

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Selling the family home and navigating aged care costs

The transition of a parent or relative into residential aged care can be one of the most emotionally and financially challenging moments a family will face.

Beyond the personal upheaval, a number of issues need to be dealt with quickly including how to fund the Refundable Accommodation Deposit (RAD), how to cover daily care fees and what to do with the family home.

On the plus side, selling the home can suddenly transform someone’s financial position from “cash poor” to “cash rich”. But for those relying on the Age Pension, the sudden spike in assets has major implications for pension eligibility, aged care means testing and ongoing fees.

Understanding how the rules work can make all the difference in turning a potentially damaging financial outcome into a sustainable aged care funding solution.

Making the move

Usually, a person’s home is exempt from the Age Pension assets test but once it’s sold, the cash is then assessed as an asset and that may reduce the pension payments.

There are a number of exemptions to this rule. For example, if you leave your home to enter aged care due to illness, your home may be exempted from the assets test for up to two years. And, it won’t be counted as an asset if your partner is still living there.i

In addition to the Age Pension means test, the types of fees and how much you pay for an aged care home bed also depend on an assessment of your income and assets. The aged care means test considers both your income and assets to determine how much government subsidy you receive and what you will pay in care fees.

Options for managing the proceeds of a sale

Once the family home is sold, the sudden boost in cash can feel overwhelming. But, with good advice, the funds can be used to improve cashflow, reduce ongoing costs and preserve as much of the pension and aged care subsidy as possible.

Here are some of the options:

1. Paying the refundable accommodation deposit (RAD)

Paying the full RAD means you don’t pay the daily accommodation fees (DAP), which can be hundreds of dollars per day. But, be aware, that a refundable lump sum is counted as your asset in the aged care means assessment, even if it is paid by a family member. This means that paying a lump sum can affect your fees. On the other hand, a RAD may improve Age pension eligibility for some people. ii

2. Paying a part RAD and part DAP

It doesn’t have to be all or nothing. You could pay some of the accommodation deposit and then pay a reduced daily fee. The advantage is that you have access to the cash for living and medical expenses.

3. Making a downsizer super contribution

For those aged over 55, up to $300,000 can be contributed to super after selling the family home, which may be a more tax-effective environment. There is no maximum age on making a downsizer contribution despite normal super rules preventing most voluntary contributions after age 75.

Your super balance is also assessed as part of the means test for both the Age Pension and aged care fees.

4. Renting the home instead of selling

This option might suit those who want to keep the property in the family. While the rental income will be counted as part of the income test, depending on how you pay for your aged care accommodation, there may be some exemptions from means testing.

In a nutshell, selling the family home can affect both the Age Pension and aged care means testing, increasing costs and reducing entitlements.

The key is in using the new funds wisely. With careful planning, families can navigate this transition in a way that protects income, manages fees and ensures the person entering aged care has the resources they need.

With so many complex and time‑sensitive decisions to make during an already emotional period, getting the right advice can be critical in helping families make informed choices and avoid costly mistakes. Please give us a call if you’d like more information.

i Real estate assets – Age Pension | Services Australia

ii Understanding aged care home accommodation costs | My Aged Care

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Is your trust structure still right for you?

Family trusts remain one of the most flexible and tax-effective structures used by Australian families and small business owners. But wealth grows, family situations evolve, tax rules shift and businesses expand over time – and all these changes can affect whether your existing trust deed is still fit for purpose.

So, as we approach the end of financial year, it’s a good time to review your trust arrangements.i

There are many reasons for taking another look at your trust, including:

  • The trust deed no longer reflects your financial or family priorities.
  • Distributions are not as tax-effective as they once were
  • Your list of beneficiaries hasn’t been updated with new partners, children or grandchildren
  • The trustee may not be appropriate now because of age or illness
  • Administration may now be a burden and outweigh the original advantages

There are also some triggers that mean you may need to consider a more complex, or even a completely different structure, and these can include the following:

A significant increase in investment or business income

A basic trust may struggle to distribute income efficiently if there are fewer adult beneficiaries; the beneficiaries are already in high marginal tax brackets; or family circumstances have changed (children have grown and are now earning higher salaries).

You are accumulating assets across multiple entities

If investment portfolios, rental properties or business activities have expanded, a more sophisticated structure may provide better asset protection, simpler management or clearer succession pathways.

The trust is being used as part of a broader family wealth strategy

As intergenerational wealth becomes a priority, a traditional discretionary trust might not offer enough flexibility in some areas such as estate planning, managing capital gains or managing assets for vulnerable beneficiaries.

You are preparing for the sale of a business or major asset

A review is critical if a trust is to be involved in the sale of shares, business assets or property. Different structures can affect access to CGT concessions, including the small business CGT concessions.

Next steps

The good news is there are several ways to adjust the trust structure without starting from scratch, including:

Amending the trust deed –  Many deeds allow for amendments to bring the document up to date such as modernising distribution provisions, clarifying beneficiary classes or updating powers given to trustees.

Changing the trustee –  If the trustee is no longer appropriate, a change can be made to appoint someone more suitable or a corporate trustee to improve governance and reduce risk.

Updating beneficiaries or redefine classes –  Some trust deeds allow for updating the list of beneficiaries or adjusting who can receive distributions. This can help ensure the trust continues to serve the family as it is today, not as it was decades ago.

Winding up the trust –  If the trust is no longer useful, it may be best to wind it up to reduce costs and complexity, although capital gains tax and stamp duty implications will need to be carefully managed.

Changing the structure – Depending on your goals, alternatives such as a company structure or a self-managed super fund may be more suitable.

Consider hybrid or testamentary arrangements – Where estate planning is involved, testamentary trusts or hybrid structures might offer more control or flexibility, particularly if supporting future generations is your priority.

Why you might add a corporate beneficiary

Another option is to use a corporate beneficiary (often called a “bucket company”), which is commonly used to cap tax on trust distributions at the corporate tax rate.ii

Here are signs it may be time to introduce a corporate beneficiary:

  • Your trust’s beneficiaries are approaching higher marginal tax brackets
  • You need an entity to hold retained earnings
  • You want more flexibility in managing year-to-year tax outcomes
  • You are planning business or investment growth

As your financial affairs become more sophisticated, having a corporate beneficiary can expand the range of future planning options including reinvestment strategies, gearing, or structures such as corporate groups or family investment companies.

 Whether your wealth is growing, your family is changing or your business is expanding, taking time each year to review your trust structure ensures you remain aligned with your objectives and compliant with tax law.

A review now can save tax, reduce risk and set your family up for greater flexibility in the years to come and we are here to assist.

i Trusts | ATO ii Can a Company Be a Trust Beneficiary in Australia? | Sprintlaw

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RBA Announcement – February 2026

At its latest meeting, the Reserve Bank Board announced it was increasing the cash rate to 3.85 per cent.

Please click here to view the Statement by the Monetary Policy Board: Monetary Policy Decision.

We’re watching closely what the banks do with their rates, as some of Australia’s biggest lenders may make changes to their rates.

Please get in touch if you would like to discuss recent rate movements or if you would like to review your finance options.

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Important Update: 2026 Vacant Residential Land Tax (VRLT) Obligations

As we move into the 2026 tax year, property owners across Victoria should be aware of critical filing requirements regarding the Vacant Residential Land Tax (VRLT). To ensure compliance and avoid potential penalties, it is essential to determine if your holdings are subject to these expanded regulations

Key Filing Deadline
Property owners must submit their VRLT notifications to the State Revenue Office (SRO) no later than 15 February 2026.

Who is Required to Notify?
The VRLT applies to specific categories of land within Victoria. You must submit a notification if any of the following applied during the 2025 calendar year:

  • Vacant Homes: Residential properties that were unoccupied for more than six months in 2025.
  • Extended Construction: Homes that have been under renovation or construction for more than two years as of 31 December 2025.
  • Undeveloped Land: Residentially zoned land in metropolitan Melbourne that has remained undeveloped for five years or more.

Notification Requirements
If you have submitted a notification in previous years, you only need to file again if your circumstances have changed (e.g., the property is no longer vacant or has been sold). However, first-time applicants or those with changes in status must act before the February deadline.

Exemptions and Submissions
The notification process is also the primary mechanism for claiming exemptions. Common exemptions include properties used as a primary place of residence or designated holiday homes.

All notifications and exemption applications must be completed online via the Victorian State Revenue Office (SRO) Website. We recommend reviewing your portfolio immediately to ensure all 2025 activity is accurately reported. For specific advice regarding your tax position, please consult with your financial advisor or legal representative.

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