Death tax: Labor defends discretionary testamentary trusts change as Jim Chalmers labels critics ‘unhinged’

Treasurer Jim Chalmers has labelled critics of his Federal Budget “unhinged” as he and fellow Labor frontbenchers have defended growing concerns the Albanese Government is trying to slap a “death tax” on Australians.

Federal ministers have faced a barrage of questions on proposed changes in Tuesday night’s Federal Budget, including why the new discretionary testamentary trusts weren’t excluded from the capital gains tax changes.

For everyday Australians, they are trying to understand why the Government will soon be slapping a minimum 30 per cent tax on certain trusts.

Labor frontbencher Tanya Plibersek refused to agree that the tax on testamentary discretionary trusts is a “death tax,” but has accepted the Budget move will hit families who try to shift their “money around”.

Appearing on Channel Seven’s Sunrise program, the Social Services Minister also suggested it was reasonable for trusts to be taxed if families were attempting to move their money around for tax minimisation purposes.

Ms Plibersek rejected suggestions the policy amounted to a “death tax”.

“Well, testamentary trusts are trusts that you set up to distribute money to your kids after you’ve died,” Ms Plibersek replied.

“You can either distribute that money in set shares to your children, or you can have someone else deciding that this kid gets more this year, this kid gets less this year.

“What we are saying is if the share is fixed, no change, that’s fine.

“If you are able to shift the money around, you might be doing that to minimise tax, so that is going to have the minimum 30 per cent tax.”

Dr Chalmers on Monday confirmed that while fixed deceased estates, fixed trusts, and existing discretionary testamentary trusts were all exempt from the changes, newly established trusts are not.

It comes after he failed to clarify when asked about whether new trusts were also excluded on Friday.

The Coalition have accused the government of implementing a “death tax” or “death duty” on a system used by families to pass down assets to their loved ones.

Speaking in Brisbane on Monday morning, Dr Chalmers was asked why he changed his approach regarding new discretionary testamentary trusts, given that much of the current Budget closely mirrors Bill Shorten’s 2016 and 2019 election platforms.

Dr Chalmers had also been the Shadow Minister for Finance under Mr Shorten at the 2019 poll.

“I’m not revisiting the decisions that we took some time ago,” Dr Chalmers said when pressed to explain his policy divergence

“My job is to make the right decisions on policy in 2026. Not to re-do the policy decisions taken in 2018 or 19 or whenever it was.”

Dr Chalmers said while he understood keeping the “busted status quo” would have been “ politically easier to do” he insisted it was about fixing intergenerational equity.

When responding to questions about a new opinion poll has ranked Labor’s Budget the worst since 1993, Dr Chalmers also accused critics of his Budget of taking part in an “unhinged scare campaign”.

“In the middle of an unhinged scare campaign from people with a partisan or commercial interest in this, and in the context of a budget which is full of hard decisions and not handouts, I don’t think it’s especially surprising to see the sorts of polls we’ve seen in recent days,” Dr Chalmers said.

In a Budget statement published on Tuesday, Labor claimed it wouldn’t apply to charitable and special disability trusts, or complying superannuation funds, deceased estates, primary production income, and certain income relating to vulnerable minors.