$2.8 billion cost looms for small businesses over trust tax reform
Small businesses warn government's planned discretionary trust reforms will cost $2.8 billion in professional fees before any tax is even paid.
Around 350,000 small businesses operate through discretionary trusts and face a major decision under the government's reform plan. From July 2028, a new 30% minimum tax applies to discretionary trusts, with an escape hatch for trusts that lock in distributions.
The cost of working out what to do, just professional advice, could hit $2.8 billion, CPA Australia warns. Professional costs are separate from actual tax and restructuring costs.
The catch: adding a single new beneficiary could invalidate the escape hatch, forcing the trust to pay 47% tax for that year before dropping back to 30%. State stamp duty questions add more uncertainty.
The government says the reform was expected to raise $4.5 billion in its first full year of operation and help fund tax cuts for workers.
- 350,000
- Small businesses in discretionary trusts
- $2.8 billion
- Professional advice cost
- 30%
- Minimum tax rate
- 47%
- Penalty tax rate for beneficiary
Why it mattersHundreds of thousands of small business owners may need to pay thousands in professional advice to navigate complex rules, raising the true cost of the reform far beyond the tax itself.
AustraliaSmall business owners running discretionary trusts will need costly professional advice before July 2028 to decide whether to restructure their business.
✓ Claims checked against the source and corrected before publish. checked 6 d ago
