Key Highlights

  • The Senate Economics Legislation Committee report is due on 13 November 2026.
  • The inquiry covers Tax Reform No. 3 and the Minimum Tax on Discretionary Trusts bill.
  • The Coalition opposes the trust bill, leaving Labor dependent on Greens support.
  • Timing, exemptions, compliance costs and the treatment of lower-income beneficiaries remain central issues.

Labor's most contested tax changes face a key test on Friday. The Senate Economics Legislation Committee is due to table its report on 13 November into Tax Reform No. 3 and the Minimum Tax on Discretionary Trusts bill, after public hearings on 5 and 6 November. With the Coalition opposed and the Greens holding the balance of power, the report's recommendations, and any dissenting comments, will signal how much change the bills may need before a Senate vote.

The House of Representatives passed Tax Reform No. 3, the minimum tax rates bill and Tax Reform No. 4 on 29 October. All three remain bills, not law, until they pass the Senate.

The trust and Tax Reform No. 3 bills were referred to the committee on 15 October. Under the bills, rollover relief for trusts that restructure would run from 1 July 2027 to 30 June 2030, and the 30% minimum tax would start on 1 July 2028.

The government has reportedly been targeting Senate passage in the third week of November. Committee reporting dates can also be extended, and a report recommending significant amendments could push any vote back. Senators from both major parties and the crossbench may also add their own comments or dissenting reports, which often reveal more about the likely vote than the main recommendations.

1. Whether the committee backs a delay

The clearest split at the hearings was over timing. CPA Australia's Jenny Wong said "I think a delay would be helpful".

Matthew Addison, until recently chair of COSBOA, took a different line, describing a one-year delay as "a waste of time" without substantial change.

The Tax Institute's Julie Abdalla urged senators not to pass Schedules 1 to 3 until the deferred regulations and instruments are published. Consultation lasted 12 Business days on the exposure draft and 10 business days for Senate submissions.

An alliance of 27 associations led by the Corporate Tax Association, including COSBOA, the Business Council, the Australian Banking Association and the AICD, has called for minimum consultation periods and an independent Office of Impact Analysis Commissioner.

2. The Greens' price

Labor needs the Greens because the Coalition opposes the bill. Greens leader David Shoebridge has backed the 30% minimum tax but said in October he would not support it if concessions undermined its aim, arguing the small business exemption went too far.

"We're not interested in being the handmaidens for yet another empty messaging exercise by the Labor Party," he said.

At the hearings, Greens Senator Nick McKim asked whether owners would switch to paying themselves salaries, and whether a business could convert to a fixed trust cheaply. COSBOA's Skye Cappuccio said a fixed-trust conversion involves the same entity change as restructuring into a company.

McKim had earlier warned that private school fees paid from trusts could escape through the charity and DGR exemption. The Greens also oppose exempting all distributions to charities and DGRs. No agreement between Labor and the Greens has been reported.

3. The $720 million small business figure

Treasury gave the committee its clearest breakdown yet of where the money comes from. Emma Gabrielsen, assistant secretary for tax analysis, said 40% of the $4.5 billion Revenue estimate comes from businesses, and 40% of that from trust businesses with net revenue under $1 million a year, or about $720 million.

Liberal Senator Jane Hume said that "doesn't sound like an enormous amount for the amount of anxiety and stress that you are causing."

Treasury's Laura Berger-Thomson said part of the rationale was "to prevent even further growth in these types of structures in our economy", adding that "the top-earning 10 per cent of individuals have 90 per cent of total trust wealth."

The number of affected businesses remains contested. ACCI says 240,000 small businesses would be hit, while Treasurer Jim Chalmers has said fewer than 10% of businesses. Treasury figures cited at the hearings put about 350,000 active small businesses in discretionary trusts, with about 140,000 expected to pay no extra tax or restructure in a given year.

4. Compliance costs and unwritten rules

Treasury's Impact Analysis puts ongoing compliance costs at $48 million a year, excluding state duties, plus one-off implementation costs of $939 million. CPA Australia estimates ongoing costs of $221 million to $595 million a year.

Important parts of the regime are still to be set out in regulations and legislative instruments. Whether the committee recommends that these be published before a vote is one of the clearest signals to watch, because it would bear directly on the reported November timetable.

State stamp duty is another gap. Federal rollover relief does not cover state duties, and the Tax Institute has called for a coordinated national approach to duties on trust restructures.

5. How the 30% floor treats lower-income beneficiaries

Under the bill, the Trustee pays 30% on the trust's taxable income, with no threshold, and beneficiaries receive a non-refundable offset. Critics say that hits beneficiaries with low average tax rates, including some retirees, who cannot use the full offset.

Hypothetical example: A trust distributes $30,000 to a beneficiary with no other income. The trustee pays 30%, or $9,000, and the beneficiary receives a $9,000 offset.

Using 2026–27 resident tax rates, with 15% applying between $18,201 and $45,000, the beneficiary's ordinary tax on $30,000 is $1,770, ignoring the Medicare levy and other offsets.

Because the offset is non-refundable, only $1,770 of it can be used, and $7,230 is lost. Without the minimum tax, the same distribution would have attracted about $1,770 in tax rather than $9,000.

Advocacy group Fair Trust Reform has proposed exempting the first $150,000 of Net Income across a family's trusts, indexed, and making unused offsets refundable or able to be carried forward. Whether the committee picks up any of those ideas will be closely watched.

Key dates to watch

- 13 November: committee report due. - Third week of November: reported target for a Senate vote, not confirmed. - 28 November: Victorian election. - December: MYEFO, which could update revenue estimates. - 1 July 2027: rollover relief window would open. - 1 July 2028: minimum tax would start, if passed.