Australian discretionary trust tax reform

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

The proposal has met with political and industry opposition. The Greens have indicated they may seek a Senate inquiry to investigate potential loopholes regarding disbursements to certain private schools. Business groups, such as Master Builders Australia, have warned that the changes could lead to project cancellations or force small businesses into expensive restructures.

In response to the federal move, the NSW Minns Labor Government has committed to a proposal to prevent businesses from incurring state stamp duty liabilities when transitioning to new federal trust arrangements. Assistant Treasurer Daniel Mulino noted that while the economy-wide adjustment cost is estimated at approximately $50 million, individual small businesses may face compliance costs in the thousands of dollars. Business NSW has supported the state-level commitment to provide certainty for small and family-run businesses.