Estate planning and management advice Archives - Vantage Wealth Management Perth

Family Trust Tax: The May Rule Changes, just changed again – What the New Election Option Means

Posted on 1 September 2026 by Sylvia Veale

Where This Started

Back in May, Treasurer Jim Chalmers announced a 30% minimum tax on discretionary trust distributions, to commence 1 July 2028 with no grandfathering. The stated goal was to align trust income with the tax rates paid by ordinary workers targeting the practice of streaming trust profits to family members on lower marginal rates, or to “bucket companies,” each year depending on who benefited most.

A three-year CGT-free rollover window (1 July 2027 to 30 June 2030) was offered for families wanting to restructure out of a discretionary trust altogether. That relief, though, did not address state stamp duty, and under the original design, a bucket company receiving a trust distribution did not receive a credit for tax already paid at trust level creating a genuine double-taxation trap.

What Changed Overnight

Following sustained pushback from small business groups particularly the Council of Small Business Organisations Australia (COSBOA), the Mortgage & Finance Association of Australia, and the Commercial & Asset Finance Brokers Association Treasury released exposure draft legislation on 3 September 2026 that materially softens the original proposal. Consultation on this draft, closes 18 September 2026.

The core addition is a new election option. From 2028–29, trustees will face a genuine choice:

Option A – Stay In The Minimum Tax Regime (The Original Design)

The trust pays 30% tax at trustee level. Individual beneficiaries get a non-refundable 30% tax credit against their distribution. Bucket companies get no such credit, so income directed through a company can face an effective rate in the order of 63–70% before it reaches a shareholder as a dividend.

Option B – Elect Fixed Distributions (The New Alternative)

The trustee makes a one-off, largely irrevocable nomination of beneficiaries and their fixed share of income (and capital). In exchange, the trust bypasses the 30% trustee-level tax altogether. Individuals are taxed at their own marginal rates as usual, and a nominated bucket company is taxed once, at the standard 25–30% corporate rate provided that company has no discretionary share structure (share classes).

The trade-off: electing Option B means genuinely giving up the year-to-year flexibility that makes a discretionary trust discretionary. It appears that once the nomination is made, the election can only be revoked as a result of death or divorce. If distributions are varied outside the nominated fixed split, or anunauthorised beneficiary is paid, the election is automatically revoked. The trust is taxed at the top marginal rate plus Medicare levy (47%) for that year, and is permanently locked into Option A afterwards.

Other design points carried over from the original proposal:

Fixed trusts, widely held managed investment trusts, bare trusts, complying super funds (including SMSFs), and special disability trusts remain outside the regime entirely.
Primary production income and income for vulnerable minors remain exempt from the minimum tax.
Genuine testamentary trusts funded before budget night (12 May 2026) remain exempt.
Any discretionary trust established after 1 July 2028 will never be eligible to make the election.

What’s Still Unresolved

Industry reaction has been cautiously positive but not uncritical. COSBOA has welcomed the election as a genuine improvement while maintaining that the broader policy design remains flawed, and has specifically flagged the permanent lock-out penalty as excessive: “This is unnecessarily punitive and does not reflect the realities of family businesses.”

There are also open questions the draft doesn’t yet answer clearly most notably what happens to a beneficiary born or added to a family after an election is locked in, since the nomination list generally can’t be expanded except on death or a relationship breakdown.

Adapting The Restructuring Conversation

For clients currently modelling their options, this changes the shape of the conversation materially:

The election is now the default question to ask first, ahead of any full restructure. For businesses and families confident they can commit to a fixed distribution pattern indefinitely, Option B avoids both the 30% trustee tax and the stamp duty exposure that would come with restructuring into a company or fixed trust.
Bucket company strategies remain viable, but only in “clean” form. Any bucket company relied on for the election must have a single class of shares existing structures using dividend streaming or differing share classes to vary payouts between family shareholders would need to be simplified before they could be nominated.
The permanence of the election is the real decision point, not just the tax rate. Families with growing or changing beneficiary groups (new grandchildren, evolving business partners) need to weigh the tax saving against locking in today’s family structure indefinitely.
Restructuring into a company or fixed trust remains the fallback for families who value ongoing flexibility over the fixed-distribution tax saving, using the existing 2027–2030 CGT rollover window accepting that stamp duty relief from the states is still not confirmed.

Bottom Line For Clients

This remains draft legislation, not law and consultation closes 18 September 2026 and further tranches (including rules on unpaid present entitlements) are still to come. The formal election, once legislated, won’t need to be made until between 1 July 2028 and 30 June 2029. There’s no need to commit to anything now, but every family currently sitting in a discretionary trust should understand that a genuine third option beyond “pay the tax” or “restructure” is now on the table, and start thinking about whether their trust could realistically operate under a fixed distribution pattern.

*This article contains purely factual information and/or general advice and does not constitute personal financial product advice. The content of this article does not take into account your personal objectives, financial situation or needs and you must determine whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

About the Author:

Matthew McCarney – Executive Director & Private Client Adviser – Vantage Wealth Management

Matthew is an Executive Director of both Vantage Wealth Management Pty Ltd and VWM Financial Services Pty Ltd.

Matt holds a Bachelor of Commerce from the University of Wollongong with majors in Industrial Relations and Management Studies. Matt has also attained a Graduate Diploma in Financial Planning from the Financial Services Institute of Australasia (FINSIA). Matt is a Fellow of FINSIA and also a member of the Financial Advice Association Australia (FAAA). Matt commenced working in the financial services industry in 1996. He has worked for two of Australia’s leading fund managers, BT Funds Management and Colonial First State. Since 2003 Matt has specialised in providing quality strategic and investment advice to his clients.

Matt is passionate about making a meaningful difference in each of his client’s financial lives. Matt co-founded Vantage Wealth Management in 2008. He has served on the Board of The Dyslexia SPELD Found WA (Inc.) since 2013.

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Generosity Without The Guilt – A Different Take on the Bank of Mum and Dad

Posted on 30 July 2026 by Sylvia Veale

Every few weeks, another headline declares that older Australians “must” step in to rescue younger generations from a housing market and cost-of-living squeeze that isn’t of their making. The commentary is loud, the politics around it louder, and the implication is rarely subtle: if you’re over 55 and sitting on equity, you owe it to your children to hand some of it over, sooner rather than later.

We think that framing deserves a closer look.

There are genuinely good reasons why a parent might choose to support an adult child financially, and we cover several of them below. But “genuinely good reason” is a different thing to “default expectation,” and in our experience the two have become blurred. Before any transfer of wealth takes place, the starting position in this office is the same one we’d apply to any financial decision: what does this do to the client’s own security, and is it being made freely or under pressure?

The Pressure Is Real and Worth Naming

Much of the current narrative around intergenerational wealth has been shaped by media commentary and, more recently, by federal budget positioning on capital gains tax and family trust structures, pitched explicitly as measures to “rebalance” opportunity toward younger Australians. Whatever the merits of the policy debate, it has had a side effect worth flagging plainly to clients: it has made some older Australians feel they are somehow the problem, and that opening the cheque book is the correction.

That is not a basis for good financial decision-making. A gift or loan made out of guilt, or in response to a headline, is rarely made on sound terms – and it is exactly the kind of decision that tends to unravel later, for the giver as much as the recipient.

Our view is straightforward: political and media noise around generational fairness is not financial advice, and clients are entitled to make decisions about their own capital on their own terms and timeframe, regardless of the mood of the public debate.

What’s Often Left Out of the Conversation

The commentary around the Bank of Mum and Dad tends to focus heavily on the upside a child helped into a home, a grandchild’s school fees covered, a family able to “get ahead.” What it discusses far less often is the downside risk sitting with the person who wrote the cheque:

The Money May Not Come Back When It’s Needed Most.

Aged care is expensive and often arrives with little notice. Capital gifted away in your 60s or early 70s, when it felt comfortable to give, may be capital you need in your 80s and can no longer access.

Relationship Breakdown Can Expose The Gift

Funds provided to a child, particularly toward a home, can become part of a property pool in the event of separation or divorce meaning a parent’s support may ultimately benefit an ex-partner rather than their own child or grandchildren.

Lifestyle Creep Is a Real Cost, Not a Soft One

Support that starts as “help with a deposit” or “help while you’re between jobs” can, without clear boundaries, become an ongoing subsidy of a lifestyle the child could not otherwise sustain – at the direct expense of the parents’ own retirement spending, travel, and discretionary income.

Fairness Between Children Rarely Stays Simple

One-off support to one child, without documentation or a clear estate planning link, is a well-worn source of family conflict down the track.

Parents Are Allowed to Say No – Or “Not Yet”

A message we increasingly give clients directly: you are not obliged to underwrite your adult children’s choices, and forgoing your own retirement comfort so a child can avoid discomfort is not a virtue in itself. There is nothing irresponsible about a client choosing to keep their capital, maintain their own lifestyle, and let their children build financial resilience the way most generations before them did – incrementally, and with some friction along the way.

For many clients, the more durable form of support is not a lump sum today but a well-structured estate plan that transfers wealth at the right time, in the right way, once their own needs – including aged care – are properly provided for.

If You Do Decide to Help, Protect Yourself First

Where a client does want to provide support, our role is to make sure it is done on terms that protect them, not just the recipient. In practice this means:

Documenting whether funds are a gift or a loan, with formal loan agreements and, where appropriate, registered security if the amount is significant.
Considering a Binding Financial Agreement for the receiving child’s own relationship, particularly where the funds are contributing to a jointly held asset.
Building the support into the client’s broader retirement and aged care funding plan, not treating it as a one-off transaction separate from the rest of their affairs.
Reviewing the client’s Will and estate plan to reflect the support already given, so other beneficiaries aren’t disadvantaged without the client’s clear intention.
Revisiting the arrangement periodically circumstances change, on both sides of the transaction.

Where We Stand

Our role at Vantage Wealth Management is to represent our clients’ interests – not the interests of the broader intergenerational debate, and not the political framing of the moment. For clients considering whether, when and how to support the next generation, that means a clear-eyed conversation about their own retirement security first, followed by a properly documented plan if support is to proceed.

If you are weighing up a request for financial support from family, or want to put appropriate protections around support you’ve already provided, speak with your Vantage Wealth Management adviser before any funds move.

About the Author:

Ben Sumner – Private Client Adviser – Vantage Wealth Management

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From Family Home to Financial Flexibility

Posted on 16 February 2026 by Egg Admin

For Australians aged 55 and over, downsizing the family home can open the door to a powerful, and often overlooked, tax planning strategy: the ‘downsizer contribution’.

We see people quite rightly releasing money from, at times, their biggest asset – the family home.

This can be because current up-keep is unsustainable; money might be needed to top up the retirement investment pool; they’re cashing up well before any extra care may be needed; or they’re just looking to put some money aside in case the kids get themselves in a crisis.

Whatever the aim, rather than just adding those monies to existing taxable investments, eligible individuals can redirect a substantial portion of their home sale proceeds into super and convert to tax free pensions; even if they’re already retired.

When used thoughtfully, the ‘downsizer contribution’ can assist with:

Strengthening Retirement Savings: A one off opportunity to move up to $300,000 per person ($600,000 for eligible couples) into your super, helping bolster balances later in life.
Improving Long Term Tax Outcomes: Funds inside super benefit from concessional tax treatment, supporting efficient and often tax-free retirement income.
Flexibility & Diversification: Shifting wealth from property into super can turn a concentrated and illiquid asset into a highly accessible and balanced portfolio.
Avoiding Costly Mistakes: Eligibility rules, strict timing requirements, and flow on impacts (including Centrelink and estate planning considerations) mean careful advice is essential, as this strategy is not for everyone.

Downsizing isn’t just about reducing the size of your yard and cashing up. With some forward planning it can deliver some fantastic tax benefits for people already in retirement.

* This article contains purely factual information and/or general advice and does not constitute personal financial product advice. The content of this article does not take into account your personal objectives, financial situation or needs and you must determine whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

This insight was originally featured on our social media feed.

The Tricky Reality of Transferring Property to Your Children

Posted on 3 November 2025 by Egg Admin

Many parents have been able to help their children get on the property ladder by gifting money or signing on as a mortgage guarantor. But some parents might choose to go a step further and transfer a property to their child, no strings attached.

Gifting your child a property can be one of the most generous things you can do for them, but there’s more to it than just swapping out the name on the title. You and your child might face significant costs, and it pays to be aware of them before making any decisions.

Capital gains tax (CGT)

The ATO is clear that when you sell, transfer or gift a property to family or friends for less than it’s worth, you’ll be treated as if you received the current market value of the property for tax purposes.¹

This is known as the market value substitution rule, and it’s in place to make sure the appropriate amount of tax is paid on a capital gain or loss, even when parties are dealing with each other on non-commercial terms.

What this means is that if you’re transferring a property to your child and it’s increased in value since you purchased it, you’ll have to pay capital gains tax on the profit, even though no money is changing hands and the profit remains unrealised.

Of course, you might be eligible for the CGT discount depending on how long you held the property. And you might be able to decrease your tax burden further by including the cost of surveyors, accountants, real estate agents and repairs (among other eligible items) in the property’s cost base. There’s also the possibility that you’ll be exempt from paying CGT altogether if the property was your main residence.

Transfer duty

CGT isn’t the only cost that might pop up — your child might have to pay transfer duty (or stamp duty as it used to be known). As with CGT, the current market value of the property is used to determine how much transfer duty is levied. And, ultimately, the amount payable will vary depending on your state or territory.

What if the property is mortgaged?

Transferring a property between family members can be complicated enough, but things can get even more tricky if the property is still mortgaged. As the mortgage will be transferred along with the property, your bank or lender will subject your child to all the usual checks to make sure they can comfortably service the loan. Along with ongoing repayments, there might also be upfront costs your child will need to budget for, such as mortgage registration or insurance fees.

Will gifting affect my Centrelink entitlement?

If you’re currently receiving any Centrelink payments, you should remember that gifted money, income or assets (including property) can still be deemed to belong to you for the purposes of the income and assets test. It’s generally a good idea to speak to a financial adviser before making any property transfers to find out if your payment will be affected.

What else do I need to know?

As any CGT and transfer duty will typically be based on the market value of the property, it can be a good idea to engage a professional valuer to handle the job for you. This can help assure the ATO that you haven’t undervalued your property to get out of paying the correct amount of tax.

There’s also the matter of your retirement and how it might be impacted by giving away such a large asset. A serious discussion should be had with your family, as well as your financial adviser, about whether you’ll have enough capital left over to enjoy the retirement you want.

Finally, if you’re certain that you want to go through with the transfer, it can be a good idea to have a lawyer draw up a deed of gift. This formalises the agreement between you and your child and, once signed, ultimately means you will no longer control the property.

Are there other ways you can help your children?

In the end, you might feel that transferring a property to your child while alive is too complicated or costly, and decide instead to pass it on via your Will. This doesn’t mean there aren’t other things you can do now to help them enter the property market. Some options include:

Let them move in with you to help with their savings goals
Chip in a sum to help cover the deposit
Agree to purchase a property jointly with your child (this might affect their eligibility for any first home buyer grants)

For many older Australians, the road to property ownership might not have been easy, but chances are it wasn’t littered with as many obstacles as younger Australians now face. If you’re thinking about helping your child by transferring a property, it can be a good idea to have a team of professionals (e.g. a financial adviser, tax expert or lawyer) walk you through the ins and outs.

Sources

1. ATO

This article is sourced from the Vantage Wealth Financial Knowledge Centre. Written and accurate as at September 13, 2024. The Knowledge Centre provides general educational information only. The content does not take into account your personal objectives, financial situation or needs. You should consider taking financial advice tailored to your personal circumstances. Vantage Wealth Management Pty Ltd has representatives who are authorised to provide personal financial advice.

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I’m Going on a Holiday – What Estate Documents Should I Have Before Take-Off?

Posted on 8 September 2025 by Egg Admin

Picture this: you’re packing your bags for a long-awaited holiday in a far-off land. Maybe you’re traversing the terracotta streets of Florence… maybe you’re planning on soaking up the rich history of Japan… or perhaps you’re planning a month of toes up under the sun on a tropical beach somewhere.

You’re long overdue for a break and you’re as ready as ever with your passport, your sunscreen, and an adventurous spirit. But, have you thought about what would happen to your money if something were to happen to you while you’re away? It’s not an enjoyable thought, but it is critical to make sure your estate planning is in order before you take off on your next adventure.

Why is this so important? Quite simply it’s to avoid other people having to pick up costs and significant inconveniences if you were to become seriously ill, or even pass away while overseas without them having access to those documents that can help them help you.

Without clear direction in who should be taking control there can be legal challenges, and added stress for your family and beneficiaries during an already difficult time.

Below are seven steps you can follow to sure up your Estate planning affairs before jetting off on your next holiday.

Create a will or check your current will is valid
A will is a legal document that outlines how your assets will be distributed after your death. It is important to have a valid will to ensure your assets are distributed to the right people at the right time.
Appoint an executor
An executor is responsible for managing your estate after your death. It is important to appoint someone you trust and who is capable of managing your affairs.
Review your superannuation and insurance
Make sure your superannuation and insurance policies are up to date, and that your nominated beneficiaries are current.
Consider an Enduring Power of Attorney (EPOA)
A power of attorney is a legal document that allows someone else to make decisions on your behalf if you are unable to do so yourself. It is a good idea to have a Power of Attorney in place, especially if you will be overseas for an extended period.
Make a list of important documents
Before you leave, make a list of important documents, such as your will, insurance policies, superannuation documents, and power of attorney. Keep these documents in a safe place, and make sure someone you trust knows where to find them in case of an emergency.
Inform your executor and loved ones
Let your executor and loved ones know where your important documents are kept, and provide them with contact information in case of an emergency.
Seek professional advice
Consider seeking professional advice from an estate planning lawyer or financial advisor to ensure your affairs are in order before you leave.

Following these steps for the first time, makes it easy to update and adjust your preferences in the future. By taking these steps, you can ensure that your estate planning affairs are in order before you leave the country for your holiday.