The surprise 'death tax' buried deep in Albo's Budget that could hit families passing wealth on to their children

By MATT JONES, SENIOR NEWS REPORTER, AUSTRALIA Published: 00:10, 15 May 2026 | Updated: 00:27, 15 May 2026 The Albanese government has quietly introduced a new tax hit on inherited family wealth as part of its sweeping Budget changes. Alongside reforms to negative gearing and capital gains tax, the government will impose a minimum 30 per cent tax rate on certain family trusts commonly used in wills and estate planning. The change targets Testamentary Discretionary Trusts - a common estate-planning structure used to pass inherited wealth to family members after death. These trusts are created through a will and only come into effect when a person dies. They are widely used because they allow families to distribute inherited money and assets in a tax-effective way, while also helping protect wealth from divorce, bankruptcy and legal disputes. They also give trustees the flexibility to change how income and assets are divided between beneficiaries over time depending on their financial circumstances. But from July 1, 2028, income earned through these trusts will face a minimum 30 per cent tax rate under the new rules. Testamentary Fixed Trusts will be excluded from the minimum tax, preserving the trusts' concessional tax treatment. Unlike Testamentary Discretionary Trusts, which allow trustees to change how income and assets are distributed, Testamentary Fixed Trusts lock in each beneficiary's entitlement under the terms of the will. Prime Minister Anthony Albanese during Question Time on Thursday, as the government faces criticism over new Budget measures that will impose a minimum 30 per cent tax on income generated through certain inheritance trusts from July 2028  How do you feel about families being hit with higher taxes when passing on their hard-earned wealth? What's your view?Estate planning expert Rachel Rofe told The Australian: 'We had no warning of this, and I had hoped there might be a carve-out for this area as there had been the last time it was mentioned in the Shorten election campaign of 2016 – but it's clearly not there.' 'The government can say that technically we are not taxing assets in estates, but it is a tax to be introduced on income generated on those assets. This is a death duty by any other name,' Ms Rofe said. Many had believed the budget announcements meant an exclusion would apply to all trusts relating to wills and estates. In a Thursday interview with Albanese, Today Show host Sarah Abo confronted the Prime Minister over breaking a promise on negative gearing - and whether that meant he could also break a promise on introducing a death tax. 'Why have you chosen to lie to Australians instead of letting them vote on it?' she asked, before asking whether his government planned to introduce a death tax. Albanese said he would not introduce the tax. But Abo continued, asking: 'But things change, don't they, as you and the Treasurer have repeatedly said.' 'No. These are the positions that we're put in, Sarah,' the Prime Minister replied. The comments below have not been moderated. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook. You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.