The Government removed the ability of minors (children under 18 years of age) to access the low income tax offset (LITO) on their unearned income on 1 July 2011.

This is clearly targeted at discretionary trusts where you can currently stream $3,333 tax free to each beneficiary child.  Assistant Treasurer Bill Shorten has said this
“will enhance the fairness of the taxation system and discourage the tax avoidance that currently occurs when high income earners allocate their income to children under 18 years of age.”

The majority of clients I know who operate through a trust are not particularly “high income” at all. This may in fact hurt a lot of people who were doing the right thing, and have set up structures according to the rules at the time, only to have the rules changed at the last minute. 

Income earned by minors from employment will still be eligible for the LITO. So send your children off to work, safe in the knowledge that by not being able to distribute any of the trust income to them you are helping save the government around $740 million.