Trusts in 2025: Still Worth the Effort?

For decades, trust structures have been a fundamental part of the Australian financial landscape—favoured for their flexibility, tax efficiency, and asset protection benefits. But as regulatory scrutiny increases and compliance becomes more demanding, many are asking: are trusts still worth it?

Is There a Shift Away from Trusts?

In recent years, we’ve observed a slow but steady trend of businesses transitioning away from trusts in favour of corporate structures. The shift is often driven by a mix of factors:

• Increased compliance obligations
• Greater regulatory scrutiny
• More complex documentation and record-keeping requirements

Trustees and directors of trustee companies are finding they need to invest more time, effort, and resources just to stay on top of their obligations.

The Timing Challenge

One of the key challenges with trusts is the need for timely decision-making, particularly around year-end income distributions. Trustees are generally required to make distribution decisions by 30 June to avoid the trust’s income being taxed at the highest marginal tax rate.

For trading businesses, this can be especially difficult, as complete financials aren’t always available before year-end. This disconnect can lead to rushed decisions, suboptimal tax outcomes, or even non-compliance if the required steps aren’t taken in time.

The ATO’s Growing Focus

The ATO has increased its focus on trust arrangements in recent years, especially around integrity rules that have long existed but are now being more actively enforced. These include rules around:

• Income splitting
• Distributions to family members
• Use of trust losses

In this environment, the risk of missteps and the chance of being caught has never been higher.

Should You Still Use a Trust?

Despite the shifting landscape, trusts still have their place when used appropriately and with the right support.

Trusts can continue to offer clear advantages for:

• Passive investment strategies
• Family wealth planning and estate management
• Certain business structures, where flexibility in distributions is still a strategic advantage

What’s changed is the level of attention required. Setting up and managing a trust is no longer a “set and forget” strategy. It requires ongoing advice, careful documentation, and timely decision-making—areas where PPT can help.

The Bottom Line

This isn’t necessarily the time to walk away from trusts but it is the time to get trusted advice.

If you’re considering setting up a trust, or reviewing an existing one, talk to our team. We’ll help you determine whether a trust structure is still the right fit for your circumstances, and work with you (and your legal advisers if needed) to ensure it’s managed effectively and compliantly. Call our team today on (03) 5331 3711 to discuss your structure.

DISCLAIMER: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.