On 12 May the budget killed the bucket company. A 30% minimum tax on trust income was the headline, but the real damage was underneath it, because that tax came with no credit when the money moved on to a company. Stack the two together and business owners were looking at an effective rate over 60% on profit they had already been taxed on once.
On 3 September the government released draft legislation that changes the picture, and Ben walks through exactly what it does. There is a window, it closes on 1 July 2028, and if you make a fixed election on your trust before then, the 30% minimum tax doesn't apply. The trade is that a discretionary trust stops being discretionary, forever.
Ben runs the numbers on a business making $400k a year and shows a gap of just under $2 million between two owners doing the same thing in different structures. He also covers the strategy the election kills, which is distributing to your adult kids. And he explains why who owns the shares in your bucket company now matters more than it ever has, with a 22-month window that just started.
WHAT YOU'LL GET OUT OF IT
What a bucket company is and why business owners built their wealth around it
How the budget got the effective tax rate on trust distributions above 60%
What the 3 September draft legislation changes, and when it's expected to pass
The fixed election, how it works, why it's permanent, and the two things that reset it
A business making $400k a year, in a company versus personally, over 10 and 30 years
Why distributing to adult children is now off the table
Who should own the shares in your bucket company
What happens to anyone who starts a business after 1 July 2028
The sequence to follow before the window closes
CHAPTERS
00:06 Is the bucket company dead? 01:10 What a bucket company actually does 02:53 What the budget did on 12 May 05:00 The 3 September draft legislation 06:13 The election window closes 1 July 2028 08:15 A discretionary trust that isn't discretionary 10:30 Plan ten years out, not twelve months 11:35 If you start a business after July 2028 14:21 Ben paid himself nothing for three years 15:45 The numbers: $200k a year into a bucket company 18:33 The adult kids strategy is finished 20:44 Income versus distribution, and payroll tax 21:27 Who should own the bucket company 22:46 Stress test your accountant 23:23 The 22-month window 24:02 Stamp duty and why the states said no 25:57 The sequence to follow before the deadline 28:00 Don't die wondering 29:20 Wrap
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DISCLAIMER This podcast is for education only and doesn't take into account your personal circumstances. It's not financial advice. If you buy a financial product, read the PDS and TMD, and seek advice tailored to your situation. Ben Nash and Pivot Wealth are authorised representatives of Fish Tacos Pty Ltd, ABN 14 649 248 082, AFSL 533055.
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