Family Protection Trust Tax Changes: What Families Need to Review

The proposed changes to Family Protection Trust taxation have understandably caused concern.

We want to help you understand what’s proposed, what remains uncertain, and — most importantly — what it means for you.

What’s proposed

From 1 July 2028, the Government proposes introducing a 30% minimum tax on Family Protection Trust distributions.

If enacted, a minimum level of tax would be applied before beneficiaries receive income. This may reduce the effectiveness of traditional income-splitting strategies and bucket company arrangements.

Several entities are specifically excluded from the proposed rules, including:

• Complying superannuation funds (including SMSFs)
• Charities
• Deceased estates
• Certain testamentary trust arrangements

What this does not mean

It does not mean Family Protection Trusts are going away.

It does not mean every trust should be unwound.

And it absolutely does not mean you need to make any rushed decisions now.

The most important thing to understand is this: strong Family Protection Trusts were never built solely for tax outcomes.

They were built to protect what your family has worked hard to build — from creditors, from family law disputes, from litigation, and from the unexpected events that life occasionally delivers.

Those protections remain extraordinarily valuable. And they remain intact regardless of how the tax rules evolve.

What families should do

Review your structure. Not in a panic, but thoughtfully.

The families who are best positioned through legislative change are rarely the ones who react fastest. They’re the ones who understand their structures clearly and have a plan that doesn’t depend on any single rule remaining unchanged.

For many families, the path forward will involve greater integration between Family Protection Trusts, testamentary trusts, companies and SMSFs — building multiple layers of protection that work together.

That’s always been the Lighthouse approach. We build for the long game.

Want to talk through what this means for your situation? We’re always only one call away.

Book a conversation with the Lighthouse team → hello@lha.au · 02 9055 1330