On 28 May I joined Kat Feeney on ABC Brisbane alongside Neal Dallas, a lawyer with Business Depot, to talk about something that has been coming up in a number of conversations I am having with clients at the moment.
The Federal Government has announced its intention to introduce a 30 per cent minimum tax on discretionary trusts from 1 July 2028. It was part of the 2026–27 Budget, and I want to be clear: as I write this, it is not yet law.
But if you have a discretionary trust in place, this is worth watching closely.
According to the Government's own Tax Explainer, the change would mean trustees pay a minimum 30 per cent tax on the taxable income of the trust, with non-refundable credits flowing through to individual beneficiaries. Existing entitlement arrangements would remain, but the floor on tax paid would shift significantly.
There are an estimated 840,000 discretionary trusts in Australia, so the potential reach of this is broad. The Government has also indicated there will be exclusions, including for income from primary production, though the full detail is still to come.
As with any proposed reform, we are working with what has been published. That picture will become clearer over time.
What I do know is this: the families and individuals who tend to navigate change well are the ones who start the conversation early, when there is still room to think clearly, weigh options, and make decisions without pressure.
If you have a discretionary trust, or are thinking about whether this structure is right for you, now is a good time to be talking with your trusted advisers. Not to react, simply to understand where you stand.
You can listen to our ABC Radio segment here: https://www.abc.net.au/listen/programs/brisbane-afternoons/afternoons/106716574 we begin at the 1:50 mark.
The Federal Government Tax Explainer is available here: https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/tax-reform-introducing-a-minimum-tax-on-discretionary-trusts
