Unions push for trust tax changes amid claims Aussie workers are paying more than the wealthy

Unions are arguing that under the current system, Aussie workers on median salaries could be paying more tax than some of the nation's wealthiest people.

Stuart Marsh
Oct 29, 2026

Young jobseekers have their eye on the healthcare sector. — The unions argue that a nurse on an average full-time salary of $90,000 could pay up to $10,000 more in tax than a household receiving the same income through a discretionary trust. Photo: Getty

Unions are urging politicians to pass hotly debated discretionary trust tax changes through the Senate.
They are arguing that under the current system, Aussie workers on median salaries could be paying more tax than some of the nation’s wealthiest people.
Approximately 90 per cent of all trust assets are owned by the nation’s wealthiest 10 per cent of households.

A coalition of unions is urging the Senate to pass the government’s hotly debated discretionary trust tax changes, arguing that under the current system, ordinary workers could pay more than some of the nation’s wealthiest families.

Led by the Australian Council of Trade Unions (ACTU), the submission will detail how a nurse on an average full-time salary of $90,000 could pay up to $10,000 more in tax than a household receiving the same income through a discretionary trust.

Currently, discretionary trusts are not taxed directly, and payments are often distributed to members in the lowest tax bracket to avoid paying higher rates.

The government wants to introduce a 30 per cent minimum tax on all discretionary trust income to stop wealthier households from distributing funds to deliberately minimise their tax bill.

federal election spending — Workers on median salaries could be paying more tax than some of Australia’s wealthiest households. Photo: Getty

ACTU Secretary Melissa Donnelly said ordinary workers were doing the heavy lifting with the amount of tax they pay.

“Australian workers are paying higher tax rates than some of the wealthiest families in the country because of discretionary trusts,” Donnelly said.

“These legal structures allow income splitting, so the wealthiest minimise their tax contribution to the public services we all rely on.

“A 30 per cent minimum tax on discretionary trust earnings will fix this economic distortion that is deepening inequality. Unions want our tax system to reward hard work, not the ability to pay a lawyer for a discretionary trust.”

Treasury figures show there are around 1 million trusts in Australia, 840,000 of which are discretionary.

Unlike trusts where beneficiaries have fixed entitlements, discretionary trusts give trustees flexibility over who receives income and how much. Commonly used by families and businesses, they can also allow income to be distributed among family members at different tax rates, potentially reducing the overall tax paid.

The top-earning 10 per cent of families receive most trust income, and the wealthiest 10 per cent of households hold about 90 per cent of total private trust wealth, or those with net worth above $2.3 million.

More than 95 per cent of individual Australian taxpayers do not receive trust income.

Since 2001, the number of discretionary trusts has doubled, outpacing new company growth by 70 per cent.

You can read our full explainer on the changes to discretionary trust tax here.

tradie — More than 350,000 small businesses use discretionary trusts, many of whom are sole operators in the building industry. Photo: AAP

But not everyone is in favour of the laws.

Advocacy groups say small businesses frequently use discretionary trusts as a way to structure their estate planning when a business changes hands from a founder to one of their children.

Treasury analysis estimates that around 350,000 small businesses in Australia are operating using a discretionary trust.

Simon Croft, Chief Executive, Industry and Policy at HIA, said the cost to restructure for small businesses could place many of them at risk.

“Small business owners don’t experience each policy change in isolation. They experience them all at once and together,” he said.

“Businesses are already dealing with rising operating costs, workforce shortages, economic uncertainty and softer trading conditions in many parts of the economy.

“At the same time, they are being asked to adapt to a growing range of regulatory and workplace changes.

“Whether it is additional payroll obligations, minimum wage increases, superannuation changes, credit card payment reforms or tax measures, every new requirement adds another layer of administration, compliance and cost.”

The coalition has also been a vocal opponent of the bill, arguing that tax changes to small business will only result in higher ticket prices for consumers.

“We already have near-record small business insolvencies, collapsing consumer confidence and real profits lower than at the change of government, and the answer from the Albanese government is to add new taxes and costs,” Shadow Treasurer, Tim Wilson, said.

“This is just another cost for businesses that cafés and tradies will have to pass on as higher prices for customers”.

Topics: Tax