Chapter 1: What is a death tax and why is it in the news?
Today's episode was made possible by our friends over at YWCA Australia. Ready? And good morning. This is the Daily Oz. This is the Daily Oz. This is the Daily Oz.
Oh, now it makes sense.
MUSIC
Good morning and welcome to The Daily Oz. It's Thursday the 28th of May. I'm Zara Seidler.
I'm Elliot Laurie.
There's a common saying that nothing is certain in life except for death and taxes. And so today I wanted to combine those two topics because why not? And let's talk about a death tax. That's right, we have heard the term death tax in the news headlines over the past few weeks and you might be a bit confused.
Death tax. Death tax. Could be reversed with the Prime Minister considering a carve-out of his CGT changes for trusts.
In today's podcast, we're going to explain the proposed changes to trusts and what that could mean for everyday Australians. Before we get there, though, here's a quick note from our wonderful head of ops, Mia.
Hey, my name's Mia. I'm TDA's first head of operations. I joined the company last November with a key part of my role being to accelerate TDA's growth and cement our position as a mainstay of the Australian media landscape.
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Chapter 2: What are the proposed changes to trust taxation?
I think popular culture has very much made trust fund babies a thing.
Yes, that's what I was thinking of, rich kids.
Yeah, which is basically that in that case your parents have set up a trust and they are dispersing money through that vehicle for future generations. There are tax implications for that and it's certainly a more favourable tax option.
situation for people to find themselves in they lower the tax that they're paying at that time so that's why it's usually held and you know a whole bunch of other reasons i'm gonna pause because our producer all that has a hand up we've been wanting her we got her a microphone and now we are welcoming her to the pod the moment has come where i have a question yeah what is it it might be a stupid question
Note, we wrote a whole book about this, Orla. It's called No Silly Questions. You should buy it, guys.
Orla hasn't read it.
Orla joined after, so we will make it a thing that she has to read it. Yes. What's the difference between a trust and a will? Great question. So a trust is... A will is that you leave money for certain people and that's like if someone were to die and they leave a will for their living, surviving family with what they are leaving for them, that's a will.
So you leave the house or you leave whatever's in your bank account. Your car. your car, whatever assets you have, you have to portion up. And so usually when you have children, you'd make a will or if you have assets, if you buy a house, kudos to you, then you get to assign that to whoever. A trust, firstly, when you're living, that is being used.
So if you set up a company and you are getting money through that company, you can start giving, allocating that to your children and while you're still living. But interestingly, I think probably because of the death thing, there is a distinction between a trust that is used when you're alive and a trust that is used when you're no longer alive.
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Chapter 3: How do trusts work in relation to taxes?
Yeah, this thing that we've all heard heaps about before. Basically, a testamentary trust is used to distribute a person's assets after they die, hence Orla's excellently timed question. And it can remain in place and include lots of generations.
So what I think I need to establish before we talk about how this term has come about is that we're not talking here about being taxed when the person dies. We're talking about still just when that money is dispersed to the beneficiaries. Okay. And so one is called an inheritance tax and that's like basically when you inherit the assets, then you're taxed. We don't have that in Australia.
Nobody is proposing that. What the government is proposing is that these types of trusts that apply when people die and, you know, live on when they have passed, that those will attract the same 30% minimum as the other types of trusts that we were talking about earlier.
Right.
Okay, interesting.
Yeah, and so under Labor's proposal, these changes, like the other changes we've heard about, negative gearing, CGT, they'll be grandfathered, meaning they will only apply to new trusts, not to existing trusts.
All right, I'm going to have to stop you there. Before we go any further, we do just have to hear a quick word from today's sponsor.
YWCA Australia is an organisation working towards gender equality, including safer, more affordable housing for women and gender diverse people. By becoming a member, you're not just supporting the cause, you're actively part of the community driving change through advocacy, leadership and action.
Okay, so just to be clear, this isn't officially called a death tax.
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Chapter 4: What is the difference between a trust and a will?
That's like a messed up fairy tale. It's like Princess and the Pig. But, like, not fun. Anyway, so I resonate deeply with these people, but they sound way more fun and chill about it than I do.
They were super chill. They even got to the point that they politely escorted the frog out to a pond nearby and they gave it a... That's a much better person than I am. They gave it a send-off by playing Crazy Frog as it hopped into the pond.
And on that note, we are going to give you a send-off by playing Crazy Frog.
And that's all we have time for today. Enjoy the dulcet tones of Crazy Frog and we'll see you later today.
My name is Lily Madden and I'm a proud Arundar, Bundjalung, Kalkadoon woman from Gadigal country. The Daily Oz acknowledges that this podcast is recorded on the lands of the Gadigal people and pays respect to all Aboriginal and Torres Strait Islander nations. We pay our respects to the First Peoples of these countries, both past and present.
YWCA Australia are the ones behind today's episode and they work on gender equality in really hands-on ways. Housing, leadership, advocacy and their membership is for people who really want to be involved in that work. Not just donate and forget but genuinely connect with the community and contribute to something that's meaningful.
If you're interested you can become a member and be part of the change.
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