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For individuals · check · quantify · tell your MP

Am I
affected?

Most trustees caught by this tax had no idea until a bill arrived, and many had been told in writing that all their tax was paid. Answer six plain questions to see whether your trust could be exposed, and what to do about it.

Start the self-check →Quantify my mistakeEmail your MP

Have these handy

  1. 01

    Your trust deed

  2. 02

    Every election in the group, and the person each one names

  3. 03

    Who received distributions, by year

  4. 04

    Any letters from the Tax Office

Don’t have them? You can still answer “Not sure”.

  1. Family trust
  2. Election made
  3. Outside on paper
  4. Family changes
  5. Tax Office contact
  6. Audit status

Question 1 of 6

Your answers stay in your browser.

Your result

Your trust
may be exposed.

Based on your answers, a distribution may have gone outside your family group, at least on paper. That does not mean you owe anything yet. It means you need proper advice now, and a review of every election and every distribution, not a guess.

Before you rely on the Tax Office’s “relief”

It is a discount on interest only, until 30 June 2027. The penalty tax itself, the top rate on income you already paid tax on, is not reduced by a dollar, and on its own it can be enough to wipe a family out. C12

Your result

Worth a
proper look.

Something in your answers needs checking against the paperwork. Most people answer “not sure” at least once, and the people caught so far were sure they were fine. Take the checklist to your adviser.

Your result

Unlikely to be
affected.

Still worth a check with your adviser at your next review: make sure every election in your group names the same person. And the law still needs fixing for the families who are.

01

See an adviser now

The only way to know is a review of every election and every distribution. Take our checklist with you.

Get the checklist →

02

Quantify your mistake

See how the tax and interest could stack up for your year and amount.

Quantify my mistake

03

Tell your MP

Every result like yours makes the case for a time limit and a discretion. It takes two minutes.

Email your MP

Important

This self-check is general information, not tax or legal advice, and cannot tell you whether you owe anything. Family trust rules are complex and depend on your trust deed and records. Speak to a registered tax agent or lawyer before you act.

Quantify my mistake · illustrative only · not tax advice

What 1999
costs today.

Enter the year a distribution went outside the family group and how much it was. If it happened again year after year, as it usually does, add that too. See how a penalty tax at the top marginal rate and daily compounding interest stack up on income that was already taxed, when the law sets no time limit.

Estimate only

Step 1 · your details

Tell us about the distribution

The income year it went outside the family group, from 1995 to 2026.

Most trusts distribute every year, so the same mistake is usually repeated every year without anyone knowing. Each year is taxed again and runs up its own interest.

The amount the trust distributed to someone outside its family group.

General information only. Uses each year’s top marginal tax rate for the penalty, that year’s resident tax brackets for the income tax already paid, and the Tax Office’s published general interest charge rates to 16 September 2026, and assumes nothing has been paid toward the penalty. It is not tax advice: speak to your adviser.

Step 2 · your estimate · 1999 → 2026

One distribution of $100,000 in 1999

Most trusts distribute every year. If the same mistake was repeated, each year is taxed again in its own right and runs up its own interest: choose “Did it happen again?” and every figure below adds those years together.

Income tax already paid on it

At that year’s resident tax brackets, as the recipient’s only income · already in the Tax Office’s hands

$39,102

Family Trust Distribution Tax: the same income, taxed again

The top marginal rate plus Medicare levy in 1999: 48.5% · C1

$48,500

General interest charge, to 16 September 2026

From day 81, compounding daily · C5 · C6

$847,805

Estimated amount the Tax Office can claim

$896,305

An illustrative estimate. The penalty and interest come to 896% of the amount distributed, on income that was already taxed. · C7

The debt

$896,305

Best case with the interest discount, by 30 June 2027

$218,061

If the maximum 80% of interest is remitted. Only before an audit starts, decided case by case. The penalty tax is not reduced by a dollar, and it is charged on income you already paid tax on. C12

Email your MP →Am I affected?

Three endings for the same family

What changes the number.

The same $100,000 distribution in 1999, with the income tax on it already paid: under today’s rules, under the Tax Office’s temporary interest discount, and under the fix this campaign is asking Parliament to make.

Today · no relief

$896,305

A penalty tax at the 1999 top rate of 48.5% on income already taxed, plus 27 years of daily compounding interest. No time limit, and no discretion over the tax itself.

C1 · C2 · C5 · C7

Best case · interest discount by 30 June 2027

$218,061

If the Tax Office remits the maximum 80% of interest. Only before an audit starts, decided case by case, and the penalty tax is unchanged. Still more than twice the amount distributed, on income that was already taxed.

C12 · C7

With the fix

$0

A time limit like every other tax: a slip from 1999 would be out of time. Plus a discretion to waive the tax for genuine mistakes.

Campaign proposal · see The Solution

Method · open and checkable

How the estimate works

We publish every assumption so advisers, journalists and the Tax Office can check our working. If you find an error, tell us and we will correct it in public.

It cannot tell you whether FTDT applies to your trust. Start with the two-minute self-check.
Am I affected? →

  1. 01

    Tax

    The top marginal tax rate plus Medicare levy for the year of each distribution: between 46.5% and 49% depending on the year, and 47% today. C1

  2. 02

    Income tax already paid

    Assumes each distribution was made on 30 June and taxed as the recipient’s only income, using that year’s resident tax brackets, Medicare levy and any temporary levies. Larger amounts therefore attract a higher average rate. The penalty tax is charged on top, on the same income. C7

  3. 03

    Start date

    The penalty is due 21 days after the distribution and interest starts 60 days later, on day 81, with no assessment or letter. For 1995 to 1998, interest runs from August 1999, after the transitional election. C5

  4. 04

    Rate

    The general interest charge rate the Tax Office publishes for each quarter, compounding daily, to 16 September 2026. Assumes nothing was paid toward the penalty. C6

  5. 05

    Repeated years

    If the same mistake was made every year, each year’s distribution is taxed in its own right and earns its own interest from its own day 81. The multi-year figure is simply the sum of those years.

  6. 06

    Interest discount

    The best case applies the maximum 80% interest remission the Tax Office says it will consider until 30 June 2027. The penalty tax is never reduced. C12

Tell your MP · email your MP

Two minutes.
One email.

MPs count the letters they get from their own electorate. A short, personal email from you to them really matters.

  1. 01

    Find your electorate and MP

  2. 02

    Add one line about you

  3. 03

    Send it from your own inbox

Step 1 · find your MP

Open the official finder to see your federal electorate and its member, then fill in the details below. Find my electorate ↗

Your postcode opens the Australian Electoral Commission’s electorate finder in a new tab.

What makes a letter land

  1. 01

    Say you live in their electorate. It is the first thing their staff check.

  2. 02

    Add one sentence about you or your business. Real detail beats strong words.

  3. 03

    Ask a direct question so the office has to reply.

  4. 04

    Be courteous. The staff who read it decide what reaches the MP.

Step 2 · make it yours

To[MP name] <[MP email]>
From
SubjectPlease fix the family trust tax trap

Dear [MP name],

I live in [Electorate] and I am writing about Family Trust Distribution Tax, a rule dating back to 1995 that has no time limit and gives the Tax Office no discretion, even for honest mistakes.

Add your own sentence · optional

Families who made a paperwork slip decades ago, and paid all the income tax they owed, are now receiving bills many times the amount involved, because interest has compounded daily ever since. The Tax Office’s interest discount is temporary and excludes anyone already under audit.

I am asking you to support two changes: a time limit, like other income tax, and a discretion to waive the tax for genuine mistakes. Parliament is already reviewing trust tax law, so the chance to fix this is now.

Will you raise this with the Treasurer, and tell me where you stand?

Yours sincerely,
[Your name]

The email opens in your own email program, addressed to your MP, so you can check it before you send. Include your address so their office can confirm you are a constituent. See privacy.

Tell us your case

Has this
happened to you?

Your story is the most persuasive thing in this campaign. We read every submission, call you back, and check documents with you. Nothing is published unless you approve the final words in writing, and you can stay anonymous.

  • We never publish without written consent
  • You choose: named, first name only, or anonymous
  • Documents are checked, then returned or deleted

Claims register · full list

Every claim, sourced.

Every code on this site (C1, C2 and so on) points to an entry here. Tap an entry to see its source. Think we got something wrong? Tell us and we will check it and correct it in public.

C1FTDT is charged at the top marginal tax rate plus Medicare levy (47% today) on the amount distributed outside the family groupVerified

Source: Australian Taxation Office, Family trusts (QC48752), updated 20 October 2026: “FTDT is payable at the top marginal rate of tax applying to individuals, plus Medicare levy (currently 47%).” Rates for earlier years: the top marginal rate plus Medicare levy for each income year.

C2The Tax Office says it has no discretion to ignore FTDT, cannot limit the period it applies to, and there is no time limit on a notice of liabilityVerified

Source: Australian Taxation Office, Family trusts (QC48752), updated 20 October 2026: “We have no discretion to ignore the application of FTDT. We also cannot limit the period to which FTDT applies.” and “There is no time limit on issuing an FTDT notice of liability.” The same wording appeared in the Tax Office’s business bulletin of 21 May 2025, since removed from ato.gov.au.

C3Unlike almost every other tax, FTDT has no time limit. Errors from the 1990s can be pursued todayVerified

Source: Joint submission of CA ANZ, CPA Australia, IPA, NTAA and The Tax Institute, May 2026.

C4Even the general anti-avoidance rules carry a four-year limit. FTDT does notVerified

Source: Joint bodies submission, May 2026.

C5Interest starts on day 81 and compounds daily, with no assessment and often without the trustee knowing a debt existsVerified

Source: Joint bodies submission, May 2026. FTDT is due 21 days after the distribution; the general interest charge applies from 60 days after that.

C6The general interest charge compounds daily, at the rate the Tax Office publishes each quarterVerified

Source: Australian Taxation Office, general interest charge rates.

C7$100,000 distributed in 1999, with income tax paid, becomes a bill of $896,305 by 16 September 2026 (illustrative)Method published

Our calculation: $48,500 penalty tax (48.5%) plus $847,805 interest at the published quarterly rates, compounding daily from day 81. Income tax already paid on the distribution at 1998-99 resident rates: $39,102. See the calculator and its method notes.

C8Australia’s peak tax bodies say most cases arise from benign errors: complex rules, missing paperwork, unclear old electionsVerified

Source: Joint bodies submission (CA ANZ, CPA Australia, IPA, NTAA, The Tax Institute), May 2026.

C9Those bodies warn the regime is “an existential threat to some businesses and their advisers”Verified

Source: Joint bodies submission, May 2026. Quote attributed.

C10About 819,000 discretionary trusts lodged returns in 2022-23Verified

Source: ATO Taxation Statistics, via NTAA in Accountants Daily.

C11Almost half a million Australian businesses (494,000) operate through a trustVerified

Source: ABS, via Ai Group, August 2026. Covers all trust types, not only family trusts.

C12Until 30 June 2027 the Tax Office will consider remitting up to 80% of the interest for trustees who self-review, lodge and pay before an audit starts. The penalty tax itself is not reduced, and the Tax Office has never called the offer an amnestyVerified

Sources: Australian Taxation Office, Extension of GIC remission offer for FTDT liabilities, October 2026 (extended from 31 December 2026 to 30 June 2027) and Family trusts (QC48752), which describes it as favourable consideration of remission of GIC, case by case, where fair and reasonable; the FTDT must be paid in full.

C13Election records only have to be kept for about five years after the entity stops lodging returns, but FTDT reaches back with no time limitVerified

Source: Australian Taxation Office, Family trusts (QC48752): written records of the original election must be kept “until generally 5 years after the trust is no longer required to lodge income tax returns”; the same page says there is no time limit on an FTDT notice of liability. The Tax Office also lists “inadequate record keeping” as a leading cause of FTDT issues.

C14Directors of a trustee company, or of a company that made an interposed entity election, are jointly and severally liable for FTDT, whether or not they took any incomeVerified

Source: Australian Taxation Office, Family trusts (QC48752): “The trustee, partners or company are generally liable for FTDT. Joint and several liability is also attached to directors of companies.”

Tell us we got it wrong

Your information

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Affected or not

The law still
needs fixing.

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