Tech founders and small-business owners face major tax hit under planned trust rules
Draft legislation would impose a 30% minimum tax on family trusts from July 2028.
The Federal Government has released draft legislation for a 30% minimum tax on discretionary trusts, set for 1 July 2028. The change would close a tax planning strategy that many founders and small-business owners rely on.
From 2028, trustees would pay at least 30% tax on trust income. Individuals who receive distributions face tax on that income but get a 30% non-refundable offset.
This offset may not cover their full tax bill if their income is high. Companies that receive distributions get no offset.
On the government's own example, $100 of trust income ends up taxed at roughly 60% when it reaches a company, and closer to 70% once paid out to a shareholder at the top rate. The government would also end "streaming" of franked dividends through trusts.
This sits alongside separate capital gains tax changes starting July 2027.
- 30%
- Minimum tax rate
- 1 July 2028
- Implementation date
- approximately 70%
- Effective tax on distributed income to
- July 2027
- Capital gains tax changes
Why it mattersFounders and business owners must now review their structure; family trusts are no longer the flexible, tax-efficient vehicle they once were for managing company income.
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