Families that run businesses or hold investments through discretionary trusts are about to see the proposed trust minimum tax tested in public. The Senate Economics Legislation Committee is scheduled to begin hearings on Thursday, and one of the sharper points in the written submissions is deceptively simple: the draft rules allow some family changes to be recognised, but Australian Industry Group says the birth of a child is not one of them.

The inquiry and its timetable

The committee is examining the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and the Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026. Both passed the House of Representatives on 29 October.

Submissions closed on 29 October. Hearings are scheduled for Thursday 5 and Friday 6 November, and the committee's report is due on 13 November 2026. The witness list had not been confirmed at the time of writing.

As introduced, the minimum tax on discretionary trusts would start on 1 July 2028, with three years of rollover relief available from 1 July 2027. It is a bill, not law, and could be amended in the Senate.

Ai Group's four proposed changes

Ai Group's submission of 29 October sets out four proposed changes, several of which focus on the Excluded Election Trust (EET) mechanism in the bill.

First, it wants state transfer duty on the EET mechanism resolved before the bill passes, possibly by extending the EET window beyond 2028-29. Second, it asks that protected rollovers be exempt from state duty.

Third, it calls for "family change provisions" so that births and other family changes, not only death and relationship breakdown, can justify changing EET nominations.

Fourth, it wants continuity rules for non-family trusts written into the bill itself. "Deferring these requirements to a subsequent legislative instrument leads to uncertainty," the submission says.

Two of Ai Group's four points concern stamp duty, which shows how much the trust changes depend on decisions outside Canberra's control.

Transfer duty is a state tax. A federal bill can offer rollover relief from federal income tax when a family trust is restructured, but it cannot by itself stop a state Revenue office charging duty on the same transfer.

For a family that moves a Business premises or Investment property into a new structure, duty can be a large upfront cost. That is why Ai Group wants the issue settled before the bill passes, rather than left for each state to address later.

Extending the EET window beyond 2028-29, as the group suggests, would give the states and families more time to work through the issue.

Why births matter

The argument about births goes to how families actually use trusts. A discretionary trust is often set up to hold a family business or investments over decades, and the people it is meant to benefit change over that time.

According to Ai Group's reading of the bill, nominations under the EET mechanism could be changed after a death or a relationship breakdown. A new child or grandchild, however, would not on its own be a trigger for change.

The group's concern is that a nomination made in the lead-up to the new regime could quickly become out of date for a growing family, with no straightforward way to update it.

Hypothetical example (illustrative scenario): a couple run a café through a family trust and make an election nominating their two children before the regime begins. In 2029 they have a third child.

On Ai Group's reading, the death of a nominated family member or a separation could allow the nomination to be revisited, but the birth of the third child would not. The family would have a structure that no longer reflects its members, and would need to rely on whatever other Options the final law provides.

The scenario is illustrative only. How nominations actually work will depend on the final legislation and any amendments. The bill is not yet law.

Other submissions: errors, elections and stranded losses

Ai Group is not the only organisation asking for changes. Pitcher Partners' submission of 30 October, led by partner Alexis Kokkinos, seeks five practical changes to the EET regime.

These include flexibility to fix genuine errors and simpler rules for making and revoking elections. Pitcher Partners also asks for transitional relief for property groups facing stranded tax losses, and for further targeted consultation.

The Tax Institute has separately criticised the short consultation and review timeframe for the wider bill and asked for a timetable for the remaining tranches of the tax changes.

What the committee could do

The committee can recommend the bills be passed as they are, passed with amendments, or not passed. Its recommendations are not binding, but they often shape amendments negotiated with the crossbench.

The government's reported aim is Senate passage of the package by the third week of November. That leaves little time between the 13 November report and a vote.

Politically, the trust measure remains contested. One Nation has pledged to scrap it, and the government needs the Greens, who have raised concerns about an exemption for private school fees.

For now, the trusts most likely to be affected are those with nominated family members, and some decisions may need to be made before 2028.

Relevant points include who the trust's current and likely future beneficiaries are, whether state stamp duty could apply to any restructure, and whether the trust has carried-forward losses.

Key dates to watch

  • Thursday 5 November: first scheduled day of Senate committee hearings.
  • Friday 6 November: second scheduled hearing day.
  • 13 November: committee report due.
  • Third week of November: the government's reported target for Senate passage.
  • 1 July 2027: proposed start of rollover relief.
  • 1 July 2028: proposed start of the minimum tax on discretionary trusts.