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Trust income tax rate increasing from 33% to 39%

There is currently a Bill before Parliament to increase the trust tax rate from 33% to 39% with effect from 1 April 2024. This is likely to have an effect on everyone that has a trust that earns income.

Unlike individuals, trusts do not have a graduated or progressive tax rate but instead the 39% rate applies from the first $1 of income. For the vast majority of trusts there will be an extra 6 cents in the dollar tax to pay.

However, there are special rules for trusts set up for disabled beneficiaries, and for the first 12 months of an estate after death, where the individual marginal tax rates can apply.

We will be working with our clients with trust income to determine the likely impact the increase in tax rate will have on them and options that could be put in place to mitigate some of the effects of the increase. If you have any questions about the trust tax rate increase and how it may affect you please contact your CT advisor.

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