For decades, trusts were fundamental in Australian financial planning strategies. They provided strong asset protection and flexible income sharing. However, new regulations and growing paperwork demands are reducing their appeal. These changes are pushing businesses and investors to question trusts’ usefulness.

Is There a Move Away From Trusts?

Yes, we see a small shift occurring. Some businesses are changing from trusts to companies. Why? Trusts now face much closer regulatory examination. Managing them involves significant administrative effort. Trustees and directors realise they must dedicate more time and money to follow complex, changing rules. Compliance has become a major burden.

Key Challenges Using Trusts

Making timely decisions is absolutely critical. Trustees must decide income distributions before June 30th. Missing this deadline means trust profits face the top marginal tax rate. This timing often clashes with practical realities. Complete financial figures, especially for busy trading businesses, frequently aren’t ready yet. Making informed distribution choices becomes very difficult. 

Achieving the best tax outcome is harder than before

The Australian Taxation Office (ATO) is also watching much more closely. They are applying long-standing integrity rules (like Part IVA) more strictly. These rules existed but weren’t always enforced heavily. The risk of errors being caught is likely higher now.

Trusts Still Offer Value (We’re Here to Help)

Even though trusts are under greater scrutiny and the rules are changing, they still have a valuable role to play. With the right advice (which Bates Cosgrave can provide alongside other specialists), trusts can offer benefits that other structures may not. They remain useful for passive investments, estate planning, and business structuring.

Now is not the time to walk away from trusts—but it is the time to get the right advice. Before setting one up, make sure it’s the best fit for your needs and that you understand the benefits, risks, and practical considerations involved.