11/06/2026
There's a hole in my bucket!
The proposed Federal Budget changes where discretionary trusts will be taxed at 30% on their distributions to beneficiaries after 1 July 2028 will cause a re-think on how dental practices are structured.
Trustees will need to take care with distributions to family members who cannot get a refund of the 30% tax withheld. Bucket companies will also pay company tax at their corporate tax rate (25% - 30%) on the distribution without any credit for the 30% tax withheld. This will result in double taxation which is likely to exceed 47%.
The only good news is that there is no reason to take action until the legislation is passed. Trustees should avoid jumping the gun and incurring costs to restructure which may be ineffective. The Budget announced that there would be an opportunity for rollover relief until 30 June 2030.
Given the proposed changes, trustees should consider maximising their distributions to bucket companies under the existing rules in the current & future years.
** Content written by Albert Gigl. Only the image was AI generated
