Trusts and estates generally pay tax on all income they earn. You’ll pay a different amount of tax depending on your trust’s individual circumstances.
The information below applies to trusts and estates from 1 April 2024 for income that is not distributed to beneficiaries. For earlier years, this income was 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 (after annual deductions and before losses brought forward), you’ll pay at a 33% rate. If your trust earns more than $10,000, 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.
Distributions that come under the minor beneficiary or corporate beneficiary rules are taxed at the rate of 39%. You can find out more information below.
The estate of someone who has died
We understand that dealing with the death of a friend or family member can be a difficult time. We want to make it as easy as possible to resolve their affairs, without adding any extra stress.
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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 if 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.
A disabled beneficiary is a beneficiary of the trust who (or whose parent or guardian) gets 1 or more of the following support payments in a tax year.
- Disability allowance
- Child disability allowance
- Supported living payment (because of restricted work capacity)
- 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.
The minor beneficiary rule does not apply to beneficiary income from a disabled beneficiary trust.
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.