Federal Budget Update #federal

So last night in Australia we had the federal budget where they proposed a lot of tax reforms. One of the biggest changes to the tax system is the way that discretionary trusts are treated. At the moment a discretionary trust operates and you don't pay tax within that trust but when you distribute income to beneficiaries those beneficiaries pay income tax at their marginal tax rates.

The changes will be that a 30% minimum income tax applies on all income generated by the trust before it's distributed out to beneficiaries and a 30 percent non-refundable tax credit gets passed along to the beneficiaries when they are passed, except for corporate beneficiaries. It is important to remember that these are proposed changes and there is yet to be a deliberation period and it needs to pass royal assent before it gets passed through to legislation. So it's important not to go and change your personal financial affairs at the moment, just wait for things to go through legislation, see what changes are proposed and then talk to your accountant and advisor before you make any changes.

So definitely don't do any changes right now and we'll just wait and see if there's any more news to come through about this.

Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).

#FederalBudget #taxreform #DiscretionaryTrust #financialadvice #wealthplanning