Would Your Testamentary Trust Provisions Meet the Exemption from the Proposed 30% Minimum Tax on Discretionary Trusts?

A testamentary trust which comes into operation on or after 1 July 2028 may be caught by the proposed 30% minimum tax on discretionary trusts if its potential beneficiaries include a trust, company or other entity (e.g. corporate beneficiaries and family trusts).

Earlier this week, the Government released further guidance around the proposed taxes. The Explanatory Memorandum makes it clear that exemptions from the proposed 30% minimum tax will be available to testamentary trusts that have been created for a ‘genuine testamentary purpose’ and which meet certain criteria.