#523 New Tax Changes Bring Trusts and Bucket Companies Back From the Dead

On 12 May the budget killed the bucket company. A 30% minimum tax on trust income was the headline, but the real damage was underneath it, because that tax came with no credit when the money moved on to a company. Stack the two together and business owners were looking at an effective rate over 60% on profit they had already been taxed on once.

On 3 September the government released draft legislation that changes the picture, and Ben walks through exactly what it does. There is a window, it closes on 1 July 2028, and if you make a fixed election on your trust before then, the 30% minimum tax doesn't apply. The trade is that a discretionary trust stops being discretionary, forever.

Ben runs the numbers on a business making $400k a year and shows a gap of just under $2 million between two owners doing the same thing in different structures. He also covers the strategy the election kills, which is distributing to your adult kids. And he explains why who owns the shares in your bucket company now matters more than it ever has, with a 22-month window that just started.

WHAT YOU'LL GET OUT OF IT

What a bucket company is and why business owners built their wealth around it

How the budget got the effective tax rate on trust distributions above 60%

What the 3 September draft legislation changes, and when it's expected to pass

The fixed election, how it works, why it's permanent, and the two things that reset it

A business making $400k a year, in a company versus personally, over 10 and 30 years

Why distributing to adult children is now off the table

Who should own the shares in your bucket company

What happens to anyone who starts a business after 1 July 2028