Andrew Charlton has defended the use of trusts as Labor weighs whether to soften a proposal to impose a minimum 30 per cent tax on distributions from discretionary testamentary trusts.
The federal government minister and former entrepreneur said trusts are a legitimate tool used by many small businesses and families for inheritance, and said he uses trusts himself. Charlton, who is Labor’s cabinet secretary and assistant minister for technology, argued the structures should not be treated as unusual or suspect simply because they are being discussed in a tax debate.
The proposal sits inside Labor’s broader budget tax changes and has already given the government a fresh political headache. By targeting discretionary testamentary trusts, it has opened Labor to attacks that it is effectively imposing a quasi “death tax,” a phrase opponents have used to frame the measure as an overreach aimed at family wealth passed on after death.
The 30 per cent minimum tax proposal is still under review, and the government is considering watering it down. That leaves Labor in a familiar bind: it wants to tighten tax settings, but it also needs to avoid turning an obscure structure used in estate planning into a flashpoint over fairness, family inheritances and political risk.
Charlton’s comments are important because they come from inside the government rather than from a defender on the outside. He is not arguing against the tax debate; he is trying to narrow it, insisting that trusts serve legitimate purposes for small businesses and families while the party searches for a way to move ahead without handing opponents an easy line of attack.
What happens next will turn on how far Labor is prepared to go in its budget tax changes. If the proposal is softened, the government may blunt the charge that it is creating a death tax by another name. If it is not, the opposition line will remain simple, and Charlton’s task will be to convince voters that a trust can be ordinary, common and lawful even as the politics around it grow sharper.
