A concise briefing on the 30% minimum tax on discretionary trusts, for business owners and professionals short on time.
From 1 July 2028, discretionary trusts face a 30% minimum tax at the trustee level, under draft law released by Treasury on 3 September 2026 (not yet law). This briefing sets out, plainly and without jargon: which trusts and income are exempt, the main risks and grey areas still unresolved, and the questions worth raising with your GTB adviser before acting.
1. Exemptions — What’s Excluded From the Tax
EXCLUDED | WHAT THIS MEANS |
Fixed trusts | Trusts with fixed (non-discretionary) entitlements to income and capital — under a new, broader legal test. |
Special disability trusts, deceased estates, super funds | Excluded by name in the draft law. |
Genuine testamentary trusts | Trusts arising from a deceased estate, if genuine and not set up mainly to avoid the tax. Trusts created from 1 July 2028 must benefit only individuals and exempt entities. |
Primary production income | Taxable farming income only — not rent or agistment fees from simply holding farmland. |
Vulnerable minors, charities, DGRs, withholding income | Narrow, defined categories — e.g. disabled or orphaned minors, registered charities, non-resident withholding payments. |
MITs, widely held trusts, bare trusts, employee share trusts | Treasury “expects” these to fall outside the tax — but only if they pass the new fixed-trust test. Not a guarantee. |
Nothing here is guaranteed for trusts outside the last row — always confirm your trust’s status before relying on an exemption.
2. Risks & Unresolved Areas
RISK | WHY IT MATTERS |
EET is unforgiving | One distribution outside the nominated shares permanently revokes the election. The whole year’s income is then taxed at 47%. There is no correction period. |
Stamp duty unconfirmed | Treasury says duty is “not expected” on the election or a restructure, but no state has formally ruled this out. QLD and NSW have left the door open. |
“Fixed trust” test is new and untested | Many unit trusts and family investment trusts will need a deed review to confirm they qualify — assuming fixed status is risky. |
Possible double tax on capital gains | The same gain could be taxed once under the trust minimum tax and again under the separate 30% minimum tax on individual capital gains. It’s unclear if the beneficiary credit properly offsets this — a gap Treasury has yet to close. |
Div 7A/UPEs still unresolved | The separate bill on unpaid present entitlements (following the Bendel case) hasn’t been released. Interaction with bucket companies is unclear. |
Loss of flexibility for succession | The EET can only be varied on death or relationship breakdown — a child born after 2028, or a change in circumstances, can’t be added. |
Deed changes carry resettlement risk | Amending a deed to “fix” entitlements could trigger CGT or duty if it changes beneficiaries’ rights too much. |
None of the above is settled law. The exposure draft is still subject to change before it is introduced to Parliament.
3. Questions Worth Asking Your Adviser
If you run a business through a trust
– Each has a different cost profile; GTB can model all three against your numbers.
— without an EET nominating it as an “eligible company”, distributions to it are taxed twice.
— they generally can’t be transferred and stay behind in the old trust.
— the concessions remain, but the interaction with this new tax isn’t yet finalised.
If you hold property through a trust
— that’s the government’s stated intention, but no state has confirmed it in writing.
— possibly, depending on your state and your beneficiaries’ residency — worth checking now.
— this is a live, unresolved risk that GTB is tracking closely.
If you’re planning for family or succession
— yes, if you stay in the regime as-is, but the tax savings from doing so largely disappear.
— only on death or a relationship breakdown, with supporting legal documents. Otherwise, no.
— it can permanently revoke the election and trigger the top tax rate on all trust income that year.
— yes, if it includes a testamentary trust taking effect after 1 July 2028, to preserve the exemption.
Talk to GTB before acting. This draft law will keep changing before it’s finalised. Every trust is different, and the right path restructure, elect, or stay as-is depends on your specific structure, assets and goals. Contact your GTB adviser to model your options.
This is general information only, current as at 24 September 2026, and does not constitute tax or financial advice. The measures described are draft law only and are not yet enacted — details may change before legislation is finalised. Please contact your GTB adviser to discuss how these changes affect your specific circumstances.
