Australia proposes tax reforms for discretionary trusts

The Australian federal government has introduced legislation to implement a 30 per cent minimum tax on discretionary trusts. Assistant Treasurer Daniel Mulino stated the reforms aim to align trust taxation with labor income, addressing concerns that trusts have been used to subvert the tax system. While the government estimates the economy-wide adjustment cost at approximately $50 million, Mr. Mulino acknowledged that individual small businesses could face compliance costs in the thousands of dollars.

In response to these federal changes, the NSW Minns Labor Government has committed to a proposal that would prevent businesses from incurring state stamp duty liabilities when transitioning to new federal trust arrangements. Business NSW has backed this commitment, noting that the changes would provide certainty for small and family-run businesses facing rising costs and compliance requirements. The state-level proposal aims to ensure that electing to become an Excluded Election Trust does not trigger unexpected tax bills.