Date: 21 October 2026
By Kylie King, Partner, Roberts + Morrow – Business Services
The Federal Government introduced legislation into Parliament on 14 October 2026 to implement its proposed 30% minimum tax on discretionary trusts. The proposal was announced in the 2026–27 Federal Budget and followed by exposure draft legislation in September.
The reforms are not yet law. If passed, the minimum tax would apply from 1 July 2028, while proposed rollover relief would become available from 1 July 2027.
For businesses and family groups using discretionary trusts, the key issues are whether the rules would apply, what alternatives are available and how NSW stamp duty could affect those choices.
What does the proposed 30% minimum tax actually mean?
In simple terms, the Government is proposing that income caught by the new rules and earned through an affected discretionary trust would face a minimum tax rate of 30%.
Under the proposal, that tax would be paid by the trustee. Non-corporate beneficiaries who are entitled to the relevant trust income would receive a non-refundable tax credit reflecting the tax already paid by the trustee, essentially making a distribution to a corporate beneficiary taxed at 55%.
The proposal could change the tax outcomes of trust distributions, but it does not mean every trust would pay an additional 30% tax. Its impact would depend on the trust, its beneficiaries, the type of income received and how distributions are made.
This distinction is important because the Government says more than 90% of small businesses will not be affected in any given year.
Are all discretionary trusts affected?
The legislation contains a number of exclusions. The Government has specifically identified fixed trusts, charitable trusts, special disability trusts and superannuation funds as outside the minimum tax.
There are also exclusions for primary production income, certain income relating to vulnerable minors, deceased estates and discretionary testamentary trusts established for genuine testamentary purposes. Certain distributions to charities, deductible gift recipients and other income-tax-exempt entities are also excluded.
For regional businesses, particularly those in agriculture, the primary production income exclusion is important. Farming and agribusiness families would need to consider both their structure and their sources of income to understand which parts of the proposed rules may apply.
What options does the proposed legislation provide?
For trusts that are affected, the legislation provides two important pathways.
1. Rollover relief for businesses that restructure
Proposed rollover relief would become available from 1 July 2027 and operate for three years. It is intended to assist businesses and other taxpayers that decide to move assets out of a discretionary trust into a different structure without some of the tax consequences that might otherwise arise from restructuring.
Unlike the current Small Business Restructure rollover, the proposed transitional rollover restructure would also be available to businesses with turnover of more than $10 million.
Restructuring would not automatically be the best option: the decision needs to account for the business and family group’s circumstances beyond annual income tax.
2.An alternative election: Excluded Election Trust (EET)
The Government is also proposing an alternative that may allow an existing discretionary trust to be exempt from the minimum tax without restructuring.
Under this approach, the trust can make an election for tax purposes and continue making distributions to pre-nominated beneficiaries in accordance with an upfront nomination.
The Government says the election would not require the trust to restructure or restrict its discretionary powers. In practice, the trust could retain its structure while accepting parameters around distributions to obtain the exemption.
What about stamp duty in NSW?
The election and restructuring pathways raise different stamp duty issues. Uncertainty has centred on whether the proposed election and nomination process could itself create a state duty liability.
The NSW Government’s 15 October 2026 media release says it intends to amend the regulations to clarify that making the initial election is not a taxable event. So, the announcement is intended to remove uncertainty, rather than necessarily waive a stamp duty liability that would otherwise definitely arise.
- Election pathway: The Federal Government says the election is not expected to attract state or territory stamp duty; NSW’s proposed clarification addresses this uncertainty.
- Restructuring pathway: A trust might instead restructure into a company or fixed trust. The Transitional Restructure Rollover can provide income tax and CGT relief for eligible transactions, but it would not automatically eliminate stamp duty on every asset transfer.
- Business assets versus property: NSW abolished stamp duty on standalone business assets such as goodwill, intellectual property and plant and equipment in July 2016. That treatment still applies, but property held in a trust remains a separate consideration.
The distinction matters: clarifying the treatment of the EET election does not resolve the potential duty costs of alternative restructures. Businesses transferring land or other dutiable assets may still face significant costs, raising the question of whether the proposed relief goes far enough to support genuine business restructures.
What should businesses do now?
There is time to assess the options before the proposed commencement date. Businesses should review how the rules could affect their existing structure rather than rush into restructuring.
Further legislation and legislative instruments are expected as implementation of the broader tax package is finalised, so the detail will need to be monitored.
Over the coming period, businesses may want to work with their Roberts + Morrow adviser to:
- identify discretionary trusts within their business or family group;
- establish whether the trust or particular types of income may fall within an exclusion;
- understand how current distributions could be treated under the proposed 30% minimum;
- compare the proposed election with restructuring;
- consider the broader tax, duty, commercial, succession and asset implications before changing an existing structure; and
- monitor the legislation as it progresses through Parliament.
If you have a discretionary trust within your family or business group, speak with your Roberts + Morrow adviser about what the proposed changes could mean for you.
The measures discussed above are proposed and remain subject to the parliamentary process. The appropriate treatment will depend on individual circumstances.
By Kylie King, Partner, Roberts + Morrow – Business Services, Tamworth
