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Trusts and estates generally pay tax on any income that they earn. You’ll pay a different amount of tax depending on your trust’s individual circumstances. Most trusts pay tax at a 39% tax rate on any income that is not distributed to beneficiaries.

The information below applies to trust and estate income from 1 April 2024. For earlier years, all trusts and estates were taxed at a flat 33% rate.

Trustee income

You must pay tax on any income that your trust does not distribute to beneficiaries. If your trust earns $10,000 or less in a tax year, you’ll pay at a 33% rate. If your trust earns any more than that, you’ll need to pay 39%. You can find the exceptions to this 39% tax rate below.

Any settlement on a trust does not count as income for tax purposes.

Trusts and estates

Getting beneficiary income  

The estate of someone who has died

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If an estate continues to earn income while it’s being wound up, that income will be taxed at a 33% tax rate. This tax rate will apply for all the estate’s income during the tax year the person dies, and for the next 3 years. After that, any income will be taxed as though the estate were a trust.

Disabled beneficiary trusts

If you settled your trust to care for disabled beneficiaries, then it will pay tax at the 33% rate, no matter how much income it earns.

For these purposes, a ‘Disabled beneficiary’ means a beneficiary of the trust who receives 1 or more of the following support payments in a tax year:

  • the disability allowance,
  • the child disability allowance,
  • the supported living payment (because of restricted work capacity), or
  • the JobSeeker Support Health and Disability (if this has been paid for at least 6 months).

Disabled beneficiaries also include anybody over the age of 65 who would have met the ‘disabled beneficiary’ definition in the year they turned 65, or the tax year before that year.

Your trust can qualify for this 33% tax rate if it cares for more than 1 disabled beneficiary, but not if it has any beneficiaries who do not meet the definition.

Energy consumer trusts

Energy consumer trusts, also known as lines trusts, are a special type of trust that deals with electricity distribution. These trusts are taxed at the 33% tax rate.

Legacy superannuation funds

Some superannuation funds pay tax at a 28% tax rate.

Income tax for registered superannuation funds

Special Report

You can find more information on our tax policy site.

Special Report: 39% Trustee Tax Rate - Tax Policy

Last updated: 11 Apr 2024
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