Trust Tax Reform Is Coming — Your Family Wealth Transfer Could Be Affected — Sydney Auction Clearance Rate at 54%

Weekly Market Focus

Trust tax reform proposed in the federal budget is triggering growing discussion around inheritance and family wealth transfer in Australia. While the changes are expected to have limited impact on most ordinary households, families using testamentary trusts or discretionary trusts as part of their estate planning strategies could face more significant consequences. Under the proposed policy, the government plans to introduce a minimum 30% tax rate on trusts from 1 July 2028, potentially reshaping a structure that has long been central to inheritance planning in Australia.

Currently, many families use trusts to distribute income among lower-taxed family members in order to reduce overall tax liabilities, a practice particularly common in estate planning. Nicholas Parker of Coote Family Lawyers noted that testamentary trusts have historically allowed minor beneficiaries to access adult tax-free thresholds, one of the key reasons for their long-standing popularity. However, the proposed reforms are not considered a so-called “death tax,” because inherited assets themselves would not be taxed immediately upon transfer. Tax obligations would generally arise only when assets are later sold or when income distributions are made.

Legal and tax experts have also cautioned that the legislation has not yet been formally enacted and could still be revised. Emma Blay of Barry Nilsson Lawyers said some families may eventually consider shifting towards structures such as fixed trusts, although these arrangements typically provide less flexibility for asset protection and intergenerational wealth planning.

At the same time, proposed changes to capital gains tax (CGT) could also affect the future taxation of inherited assets when sold. Industry professionals generally advise against rushing to restructure existing trust arrangements before the policy framework becomes clearer, warning that premature changes could trigger unnecessary CGT liabilities or stamp duty costs.

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Last Week’s Auction Results

Sydney: A total of 1,038 properties were taken to auction, with results reported for 560 properties. Of these, 304 were sold, resulting in a clearance rate of 54%. The total auction value reached AUD 273,037,611, with a median price of AUD 1,405,000.

Melbourne: A total of 1,032 properties were taken to auction, with results reported for 687 properties. Among them, 407 were sold, achieving a clearance rate of 59%. The total auction value amounted to AUD 266,295,038, with a median price of AUD 905,000.