That means she pays 30 cents in the dollar of tax on the bulk of her income, 16 cents on another part and no tax on the first $18,200 she earns.On average, including the 2 per cent Medicare levy, Jane pays just under 23 per cent tax across her earnings.After expenses, John's practice clears a $400,000 annual profit.If he personally took all those earnings as dividends, he'd pay 45 cents in the dollar on everything over $190,000, 37 cents in the dollar on earnings between $135,001 to $190,000, 30 cents in the dollar on $45,001-$90,000, 16 cents in the dollar on earnings between $18,201-$45,000, and nothing on earnings under the tax-free threshold.John would pay an average tax rate of just under 39 per cent, including the 2 per cent Medicare levy across all his income.But if his discretionary trust spreads the distributions, John and his family end up paying much less tax.Let's say his wife doesn't work and he has two adult children studying at university.If John's trust pays him $175,000, then the highest tax rate he pays is 37 per cent and his average tax rate goes from 39 to 28 per cent.Let's say his wife gets $135,000 On that she pays an average tax rate of just over 25 per cent — not much above Jane.Each of John's two adult kids get $45,000 to live on while they're at university