Key Highlights

  • About $720 million of the $4.5 billion estimate comes from businesses earning under $1 million.
  • The proposed minimum tax on discretionary trusts is 30%.
  • The proposed start date is 1 July 2028, subject to passage of the bills.
  • Rollover relief would run from 1 July 2027 to 30 June 2030.

Treasury has put a figure on how much of Labor's proposed 30 per cent minimum tax on discretionary trusts would come from smaller operators: about $720 million of the $4.5 billion Revenue estimate. The breakdown, given to a Senate committee last Friday, arrives as that committee prepares to report and as Business groups argue the burden on small family enterprises is out of proportion to what they would actually pay.

How Treasury arrived at $720 million

Treasury's Emma Gabrielsen, assistant secretary for tax analysis, set out the numbers at the Senate Economics Legislation Committee hearing on Friday 6 November.

Of the $4.5 billion revenue estimate, she said about 40 per cent, or roughly $1.8 billion, would come from businesses. Of that business share, about 40 per cent would come from trust businesses with net revenue under $1 million a year.

Hypothetical example: the arithmetic behind the headline figure is straightforward. Multiply $4.5 billion by 40 per cent and the result is $1.8 billion. Multiply $1.8 billion by 40 per cent again and the result is $720 million.

On those numbers, businesses under the $1 million mark would account for about 16 per cent of the total estimate. Larger trust businesses would account for roughly $1.08 billion, and the remaining 60 per cent, about $2.7 billion, would come from outside the business category altogether.

The $4.5 billion is an annual figure. Treasury projects the minimum tax will raise about $4.5 billion a year by 2029–30. Like any revenue estimate, it depends on assumptions about how trusts and their beneficiaries respond, and those assumptions have not been published in detail.

Why the figure cuts both ways

For opponents, the number is evidence that small businesses are a minor part of the revenue story. Liberal Senator Jane Hume told the hearing the amount "doesn't sound like an enormous amount for the amount of anxiety and stress that you are causing".

Treasury's answer is that revenue is not the only aim. Laura Berger-Thomson, a first assistant secretary at Treasury, told senators: "Part of the rationale for this reform is to prevent even further growth in these types of structures in our economy."

She also said "the top-earning 10 per cent of individuals have 90 per cent of total trust wealth", a point the government has used to frame the measure as a fairness reform rather than a small business tax.

The two readings are not necessarily in conflict. A measure can raise a modest sum from small businesses while still imposing restructuring and compliance work on many of them, and that is the core of the industry complaint.

The cost side of the ledger

The government's own Impact Analysis puts one-off implementation costs at about $939 million, within a range of $780 million to $1.1 billion, plus about $48 million a year in ongoing costs. It assumes an average restructure costs about $11,000.

CPA Australia disputes those figures. It estimates ongoing compliance costs of $221 million to $595 million a year.

These estimates cover all affected trusts, not only those with net revenue under $1 million, so they cannot be set directly against the $720 million figure. Still, critics argue that if a large share of the compliance effort falls on smaller trusts, the cost per dollar raised from that group could be high.

The Family Business Association's chief executive, Catherine Sayer, said senators were being asked to vote on a $4.5 billion tax without published modelling.

Where the bills stand

The House of Representatives passed Treasury Laws Amendment (Tax Reform No. 3), the Minimum Tax on Discretionary Trusts rates bill and Tax Reform No. 4 on Thursday 29 October. The bills had been referred to the Senate committee on 15 October.

These are bills, not law. Under the legislation as introduced, rollover relief to help trusts restructure would run from 1 July 2027 to 30 June 2030, and the minimum tax itself would start on 1 July 2028.

The government is reported to be aiming for Senate passage in the third week of November, though that timetable has not been officially confirmed. Labor needs the Greens, because the Coalition opposes the trust bill.

Greens leader David Shoebridge has said he backs a 30 per cent minimum tax but will not support it if concessions undermine its purpose, and that the small business exemption goes too far.

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

The other numbers in the debate

The $720 million sits alongside several other contested figures. The Australian Chamber of Commerce and Industry has said 240,000 small businesses would be hit, while Treasurer Jim Chalmers has said fewer than 10 per cent of businesses would be affected.

Treasury told the inquiry about 238,000 small businesses operate through a discretionary trust. Separately, Earlier Treasury figures put the number of active small businesses using discretionary trusts at about 350,000, with about 140,000 not expected to pay extra tax or restructure in a given year.

Those figures measure different things, and none of them shows how much a typical small trust would pay. That is the gap senators are likely to press on in the final stretch.

What to watch

Friday 13 November 2026: the Senate Economics Legislation Committee is due to table its report. Any recommendations on a small business carve-out, a revenue threshold or a delay will shape the final negotiations.

Third week of November: the government's reported target for a Senate vote. Watch for any amendments negotiated with the Greens, including changes to the small business exemption.

December: the Mid-Year Economic and Fiscal Outlook may update the revenue estimate if the bills are amended or delayed.

1 July 2027: the proposed start of rollover relief for trusts that choose to restructure.

1 July 2028: the proposed start of the minimum tax, if the bills pass in their current form.