Family Trust Tax Changes: 3 Things Business Owners Need to Know

If your business uses a family trust, proposed Australian tax reforms could change the way your trust is taxed from 1 July 2028.

The Australian Government has proposed a 30% minimum tax on discretionary trusts, with draft legislation released in September 2026.

The changes are not yet something business owners need to panic about or immediately restructure for. However, they are something worth planning for.

Here are three things Sunshine Coast business owners should know about the proposed family trust tax changes.

1. Your Family Trust Could Face a 30% Minimum Tax

Under the proposed changes, trustees of discretionary trusts would generally pay tax at a minimum rate of 30% on taxable trust income from 1 July 2028.

Individual beneficiaries would still declare distributions in their own tax returns and would generally receive a non-refundable tax credit for tax already paid by the trustee. Corporate beneficiaries would not receive this credit.

What does that mean for business owners?

One of the features of a discretionary trust is the flexibility to distribute income among eligible beneficiaries.

If income is currently distributed to an individual whose marginal tax rate is below 30%, the proposed rules could reduce some of the tax benefits currently available.

However, not every family trust will be affected in the same way.

The impact will depend on factors such as:

• The type of trust you have
• How much income the trust earns
• Who receives distributions
• The tax position of your beneficiaries
• How the trust fits within your wider business structure.

Some trusts and types of income are also expected to be excluded from the new rules.

The takeaway: Don’t assume a 30% minimum tax automatically means your family trust no longer makes sense. First, work out how the proposed rules would apply to your specific structure.

2. You May Have More Than One Option

For business owners who could be affected, the decision may not simply be to keep or close the trust.

Under the draft legislation, a discretionary trust could potentially elect to make fixed distributions to pre-nominated beneficiaries and become exempt from the minimum tax.

This could allow some businesses to retain their trust structure while changing how distributions are managed.

Another option could be restructuring.

The Government has proposed rollover relief for eligible businesses and others that move from a discretionary trust into another structure, such as a company or fixed trust.

The proposed relief is expected to be available for three years from 1 July 2027.

So, which option makes sense?

That depends on the business.

Your trust may hold assets, interact with other entities or form part of your succession and longer-term financial planning. Tax is only one part of the decision.

Before changing anything, consider:

• Your current and expected business income
• How distributions are currently made
• The beneficiaries of the trust
• Assets held by the trust
• Associated companies or other entities
• Succession and ownership plans
• The potential cost and consequences of restructuring
• Whether the proposed fixed-distribution option could apply

Speak to an accountant at Core Business Accountants, we can help guide you in a direction that best suits your needs.

The takeaway: A new tax rule doesn’t automatically mean you need a new business structure. Compare the options before making a decision.

3. Now Is the Time to Review, Not Rush

The proposed minimum tax is not expected to commence until 1 July 2028.

That gives established business owners time to understand what the changes could mean and prepare accordingly.

Rather than waiting until the rules are about to commence, use this period to ask some practical questions:

How is our trust currently being used?

Look beyond the trust itself. Understand where income comes from, where it goes and how the trust connects with the rest of your business structure.

Would the proposed 30% minimum tax actually affect us?

The answer will depend on your trust, beneficiaries and distribution strategy.

What would our alternatives look like?

Your accountant can model different scenarios rather than relying on assumptions about which structure will produce the best outcome.

Are there other consequences of restructuring?

Changing your structure can have tax, legal, financing, asset ownership and administrative implications. These should be considered together.

The takeaway: You have time to plan. Use it to understand the numbers before making major changes.

What Should You Do Next?

For Sunshine Coast business owners using discretionary trusts, the next step is relatively simple:

1. Review your current structure.

Understand how your trust is being used today and how income is distributed.

2. Model the proposed changes.

Work out whether the 30% minimum tax could affect your current strategy and what different scenarios could look like.

3. Develop a plan.

If changes are likely to be required, consider your options and timing rather than waiting until 2028.

Headlines about a “30% trust tax” don’t tell you whether your business will actually be better or worse off.

Your numbers do.

At Core Business Accountants, we help Sunshine Coast business owners gain clarity and confidence in their finances through practical business advice, tax planning and SMSF strategies. We take the time to understand your goals and current position before recommending clear, actionable strategies and helping put them into practice.

With major family trust tax changes being considered, proactive planning can help you understand your options well before the proposed rules commence.

Discover how we can help