New 30% tax on farm trusts threatens succession plans
The government proposes a 30% tax on discretionary trusts from 2028-29. It is expected to raise about $4.5 billion yearly by 2030.
Farm families widely use discretionary trusts. Discretionary trusts help manage income over decades and pass businesses to the next generation.
The new tax would force trust owners to pay 30% on most distributions. Primary production income gets exempted.
Accountants warn the government's proposed workaround is rigid and unrealistic. It would let trusts lock in fixed payments to named beneficiaries.
But farms have unpredictable annual incomes. Any new beneficiary added, including a child born after the lock-in date, would force the trust to pay 47% tax.
Tax advisors say this makes succession planning harder, not easier.
- 30 percent
- Tax rate
- 2028-29
- Start year
- 4.5 billion dollars annually by 2030
- Expected revenue
- 47 percent tax
- Penalty for new beneficiary
Why it mattersMost farming businesses rely on trusts for flexibility. An inflexible exemption could force many farms to restructure. They might need to hire expensive advisors or face unexpected tax bills.
AustraliaAustralian farmers face significant extra costs and legal complexity from 2028-29 onward unless they hold purely farming income. Succession plans for family farms could stall or become unviable.
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