We are all going to pass away but is it possible to escape some of the recently announced tax reforms as we depart this world?
My last article addressed the Federal Budget plan of a proposed 30 per cent minimum tax on Discretionary Trusts, and the possible inclusion of Testamentary Discretionary Trusts (‘TDTs’) – that is, trusts within Wills. It seemed an ‘odd’ outcome that TDTs would be bundled in with Discretionary Trusts for the proposed new tax treatment for trusts.
Trusts within Wills provide a useful mix of flexibility, asset protection (including in family law disputes) and tax advantages.
On June 18, 2026, the government provided a very welcome clarification on the treatment of TDTs and confirmed all TDTs will be exempt from the proposed 30 per cent tax.
The exemption will extend beyond existing TDTs and covers future TDTs.
The government’s announcement is designed to remove uncertainty surrounding taxation of inheritances and deceased estates.
Although I don’t recommend the drastic step of passing away as part of your tax planning regime, it’s at least comforting to know TDTs will continue to play a central role in estate planning, asset protection and tax-effective wealth transfer strategies for our clients. Watch this space!
Trent Wakerley, director, Wakerley Legal, Level 3, Ocean Central, 2 Ocean Street, Maroochydore, 5443 9600, wakerleylegal.com.au.
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