Highlights

  • Catherine Sayer of the Family Business Association wants Treasury's modelling for the 30% trust minimum tax published before senators vote.
  • Treasury expects $4.5 billion a year by 2028–29, while critics estimate restructuring costs of $8 billion to $13.3 billion.
  • Trusts that fix beneficiaries' shares could elect out of the minimum tax, and others would gain rollover relief to restructure.
  • Submissions to the Senate Economics Legislation Committee close on Thursday 29 October, with its report due on 13 November.

"A $4.5 billion tax on figures nobody outside Treasury has seen." That is how Family Business Association chief executive Catherine Sayer describes Labor's proposed 30% minimum tax on discretionary trusts, and she wants the working behind the number made public. With submissions to the Senate inquiry closing on Thursday, the fight over who gets to see Treasury's modelling could shape how the bill fares.

The call for the modelling

Sayer has asked the Senate Economics Legislation Committee to publish Treasury's modelling. She argues that two weeks is "a short time to examine a measure of this size" and questions whether the $4.5 billion would materialise if families restructured to avoid the tax. The "tax avoidance" label often applied to discretionary trusts is, in her words, "a misnomer".

What the bill would do

The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 was introduced on 14 October 2026, alongside the Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026. Neither is law yet.

From 1 July 2028 the trustee would pay a 30% minimum tax on discretionary trust net income, with non-company beneficiaries receiving a non-refundable offset for their share. Rollover relief from 1 July 2027 to 30 June 2030 would ease restructuring into another entity such as a company, although state and territory duties would still apply. Trusts that fix beneficiaries' shares could make an "excluded election trust" election to switch the tax off.

The government says the fixed-distribution election "shouldn't trigger stamp duty", while opponents flag possible state duty liabilities. The bill also carries a one-off Payday Super measure and leaves 12 rules to ministerial instruments not yet released.

Where the $4.5 billion comes from

Treasury expects the measure to raise $4.5 billion a year by 2028–29, its first year, though some earlier reporting described that figure as spread over five years. About 350,000 active small businesses, roughly one in six, operated through a discretionary trust in 2022–23. The government says about 140,000 of them are not expected to pay extra tax or restructure in a given year, leaving roughly 210,000 exposed.

Treasurer Jim Chalmers has said fewer than 10% of small businesses will be affected. A June release on a separate measure referred to "all 2.7 million active small businesses", and 10% of that would be about 270,000.

The cost on the other side

Wilson Asset Management and CPA Australia estimate trust restructuring and advice costs at $8 billion to $13.3 billion. That estimate has not been independently modelled, and the government has not offered a competing number. The gap between the figures drives the push for Treasury to release its working.

A simple example

Hypothetical: a family trust distributes $40,000 to an adult beneficiary with no other income. On 2026–27 resident rates, ignoring the Medicare levy, the beneficiary today pays 15% above $18,200, or $3,270. Under the minimum tax the trustee pays 30%, or $12,000, and the offset covers the beneficiary's $3,270 but the excess $8,730 is not refunded. Tax on that distribution rises from $3,270 to $12,000.

A beneficiary on more than $190,000, taxed at 45%, faces no extra tax on a $100,000 distribution, because the $30,000 the trustee pays is fully absorbed by the offset. The measure bites mainly on lower-taxed beneficiaries, so revenue depends on how families respond.

Housing rules ride along, and the dates

The same bill amends the legislated negative gearing and CGT reforms, so those amendments would fall if the Senate rejects it. With the Coalition opposed and the Greens having sought the inquiry, the government faces negotiation. One Nation leader Pauline Hanson has pledged to scrap the trust tax.

A practitioner survey closes on Friday 30 October, and hearings are expected in November, though dates are unconfirmed.