CANBERRA, ACT, Oct. 14 -- The Treasurer of Australia issued the following media release:
The Albanese Government has introduced the next tranche of legislation to implement the most ambitious tax reform package in a generation.
These reforms are all about making the tax system fairer and more sustainable and funding income tax cuts for Australian workers.
This legislation introduces a minimum tax on discretionary trusts from 1July 2028 to better align the tax treatment of income from assets and income from wages and salaries, which is how most people earn a living.
There are legitimate reasons to use a trust, but they also allow a small number of people to plan their tax affairs in ways that aren't available to most Australians.
More than 95percent of individual taxfilers don't receive trust income and more than 90percent of small businesses will not be affected by these changes in any given year.
We are providing options to be exempt from the minimum tax entirely and rollover relief for businesses that want to restructure.
The Treasury Laws Amendment (Tax Reform No.3) Bill 2026 and Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026 include the following measures:
* Implementing the core components of the minimum tax on discretionary trusts, including a new definition of fixed trusts.* Expanded options to limit or eliminate restructuring costs for small businesses and others using discretionary trusts.* Implementing the next tranche of legislation for the Government's reforms to negative gearing and capital gains tax (CGT).* Providing transitional relief for excess contributions in the first year of Payday Super.
Although the proportion of people with a discretionary trust is small, the settings are becoming unsustainable with the number of trusts more than doubling over the past 20years.
Several reviews over the past 50years have raised the need to reform discretionary trusts.
Fixed trusts, charitable trusts, special disability trusts and superannuation funds, as well as primary production income and certain income relating to vulnerable minors will all be exempt from the minimum tax. Deceased estates and discretionary testamentary trusts established for genuine testamentary purposes will also be excluded.
All distributions from trusts to registered charities and deductible gift recipients (DGRs) are also exempt, as well as distributions to other income tax‑exempt entities like sporting clubs up to a reasonable cap.
Small businesses and others using discretionary trusts can access rollover relief from 1July 2027 if they want to restructure, or can make an election for tax purposes to be exempt from the minimum tax, for as long as they continue to make distributions to pre‑nominated beneficiaries in line with an upfront nomination.
That would not require a restructure or restrict a trust's discretionary powers and is not expected to incur state and territory stamp duties.
This is the result of close and careful stakeholder consultation, and we thank everyone who provided input into this process.
The legislation makes other important changes to support our broader tax package, including supporting new housing supply and preserving tax arrangements for a range of housing types like affordable and public housing.
It clarifies the operation of the reforms to capital gains tax for more complex and specific circumstances, including for a range of trust structures.
It also includes the definition of a new residential dwelling and exemptions from the limits on negative gearing for affordable and public housing, specialist disability accommodation, operators of retirement villages and residential aged care, and build‑to‑rent developments.
We will continue to consult with stakeholders on further tranches of legislation and legislative instruments as we finalise the implementation of our tax reform package.
Since the Budget, we have already passed significant reforms to cut taxes for 13million workers, support more Australians to get into the housing market, and we are delivering $3.8billion in lower taxes for businesses and start ups.
This is all part of our plan to take pressure off Australians and build a better tax system for workers, businesses, and future generations.
Disclaimer: Curated by HT Syndication.
