Proposed Trust Tax Changes

BySLS Advisory

Last week, the Federal Government released a consultation paper outlining its proposed 30% minimum tax on discretionary (family) trusts.

It is important to note that these proposals are not yet law and remain subject to consultation and potential change.

Treasury is currently seeking submissions from industry and stakeholders, with consultation open until 31 July 2026.

What has been proposed?

Under the current proposal:

  • Trustees of discretionary (family) trusts would pay a minimum 30% tax on the trust’s taxable income.
  • Individual beneficiaries would generally receive a tax offset recognising tax already paid by the trustee.
  • Corporate beneficiaries would generally not receive a corresponding tax offset, which could significantly affect common trust and bucket company arrangements.

Which trusts would be affected?

The proposal is currently aimed at discretionary (family) trusts, although Treasury is still consulting on exactly how these trusts will be defined.

A number of trusts are proposed to be excluded, including:

  • Fixed trusts
  • Complying superannuation funds
  • Charitable trusts
  • Deceased estates
  • Certain testamentary trusts
  • Certain primary production income streams

Proposed transition relief

The Government has proposed a three-year rollover relief period commencing from 1 July 2027 to assist eligible taxpayers with restructuring.

However, the detailed eligibility criteria and operation of the relief are still being developed.

What should you do?

At this stage, we recommend taking a measured “wait and see” approach.

As these proposals are still in the consultation phase, there is generally no immediate action required, and we suggest avoiding major restructuring decisions based solely on the current consultation paper.

We will continue to provide updates as further information becomes available. Please do not hesitate to contact us if you would like to discuss how these proposed changes may affect your circumstances.

Disclaimer

This update is based on Treasury’s consultation paper released on 8 July 2026. The proposals discussed are not yet law and may change substantially before any legislation is enacted.