Australia’s discretionary trust taxation framework is facing significant reform, with the Federal Government proposing a 30% minimum tax on discretionary trust income from 1 July 2028. The changes could affect how family businesses manage income distributions, tax obligations and long-term succession planning.
For business owners seeking an accountant Box Hill, understanding these proposed changes is increasingly important. The reforms may reduce some tax-planning advantages traditionally associated with discretionary trusts, making early financial modelling and structural reviews essential.
On 14 October 2026, the Government introduced the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and accompanying legislation into Parliament. The measures remain subject to parliamentary approval and potential amendments. Australian Treasury
How Would the 30% Minimum Tax Work?
Under the proposed legislation, trustees of affected discretionary trusts would become liable for a minimum 30% tax on relevant trust income.
The proposed system includes offsets intended to recognise tax paid at the trustee level. Individual beneficiaries would generally receive non-refundable tax offsets, while different treatment would apply to corporate beneficiaries.
The Government has also proposed exclusions covering certain trust categories and income types, including fixed trusts, charitable trusts, special disability trusts and qualifying primary production income.
These provisions mean the impact will depend on each trust’s structure, income sources and beneficiary arrangements. Australian Treasury
Restructuring Relief and Alternative Options
The proposed legislation provides two important planning pathways.
- Transitional rollover relief: Eligible trusts could restructure into alternative entities between 1 July 2027 and 30 June 2030 without triggering certain immediate income tax consequences.
- Excluded election trust option: Eligible trusts could elect to distribute income and capital according to predetermined beneficiary proportions, potentially avoiding the minimum tax without restructuring.
Neither option is automatically suitable for every business. Restructuring may affect capital gains tax concessions, stamp duty, asset protection, financing arrangements and succession planning.
A qualified Box Hill accountant can help business owners compare the financial consequences of maintaining an existing trust against alternative arrangements. CPA Australia
What Should Family Businesses Do Before 2028?
Family businesses across Box Hill, Doncaster and Melbourne’s eastern suburbs should consider reviewing their existing arrangements before the proposed commencement date.
Key priorities include:
- Reviewing trust deeds, beneficiary arrangements and historical distributions.
- Modelling future tax liabilities under the proposed minimum tax.
- Assessing whether restructuring or a fixed-distribution election would be appropriate.
- Considering long-term succession, asset protection and business growth objectives.
- Monitoring legislative developments before making irreversible structural changes.
Early assessment can help identify potential cash-flow pressures while preserving flexibility as the legislation progresses.
Professional Guidance for Business Owners
Infinity Solution Tax Plus provides accounting and taxation services to businesses and individuals from its Box Hill office.
As a trusted Box Hill accountant, the firm can assist with trust structure reviews, tax planning and financial modelling to help business owners understand the implications of proposed reforms.
Businesses in Box Hill and Doncaster can benefit from reviewing their circumstances before making decisions that may have long-term taxation consequences.
Final Thoughts
The proposed 30% minimum tax represents a substantial potential change to Australia’s discretionary trust taxation system.
With a proposed commencement date of 1 July 2028 and a Senate committee report due on 13 November 2026, the legislative details may continue to evolve.
Early preparation, informed financial modelling and ongoing legislative monitoring will help family businesses respond appropriately while avoiding unnecessary restructuring costs.
Disclaimer: This article contains general information only and does not constitute financial or taxation advice. You should seek personalised advice from a registered tax or financial professional.
