Tax changes to discretionary trusts are likely – what is happening and why are some Australians upset?

The government has introduced a new tax rule in parliament. It will set a minimum 30% tax on income people receive from discretionary trusts. Treasurer Jim Chalmers says this will make the system fairer. The change is expected to raise about $4.5bn in its first year, 2029-30. The money would help pay for tax cuts for workers. The government calls it the most ambitious tax reform in a generation. Some Australians, however, are upset about the plan.

A discretionary trust is a way to hold money and assets. A person or company can share the income among family members. This can lower how much tax is paid in total. Only a small number of people use them. More than 95% of taxpayers get no income from trusts. Those who do tend to be wealthy. Critics say trusts are used to avoid tax and pay less than ordinary workers. Supporters say the new rule closes a loophole. The plan has become a big political fight.

Most people will not be affected by this change. But the money raised could help fund tax cuts for workers. It is a debate about who pays what.