Australia introduces contentious 30% minimum tax on discretionary trusts

The Australian government has introduced the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 to Parliament, proposing a minimum 30 per cent tax on income earned through discretionary trusts. Treasurer Jim Chalmers stated the reform aims to make the tax system fairer and more sustainable, noting that the number of such trusts has more than doubled in 20 years. The legislation includes exemptions for primary production income, charitable trusts, and superannuation funds.

The bill faces significant opposition and scrutiny. The Greens have signaled they may push for a Senate inquiry, specifically targeting a potential loophole where disbursements to private schools with charitable status might avoid the new tax. Meanwhile, business groups, including Master Builders Australia, have warned that the changes could force small businesses into costly restructures or lead to project cancellations, potentially impacting the housing supply.

Political tension is rising as the government seeks support in the Senate. While the Coalition opposes the tax hikes, the Labor government may need to negotiate with the Greens to pass the measures, which are intended to fund income tax cuts for workers.