Compliance

Compliance Steps for Trusts Under Australia’s 2026‐28 Tax Reforms

Discretionary trusts are now heading into higher compliance and minimum tax territory by 2028—these reforms demand immediate planning and action.

By NomadicTax Research Team • 5-8 min read • June 10, 2026

## Trusts in Focus The 2026-27 Budget introduces a **30% minimum tax** on discretionary trusts distributing to non-corporate beneficiaries, effective from **1 July 2028**. Together with changes to CGT and negative gearing, this increases compliance and reshapes how trusts distribute income. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) ## Key Compliance Requirements and Deadlines - **Income years starting 1 July 2028** will be subject to the new minimum tax rules for discretionary trusts. Start preparing in advance. - From **1 July 2027**, small businesses and others may need to restructure or consider alternates, especially if relying on trust distributions to non-corporate individuals. Transitional roll-over relief is available for three years from 1 July 2027. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) - CGT reforms and negative gearing changes commence **1 July 2027** and will affect how trust‐held assets generate gains and losses. ([budget.gov.au](https://budget.gov.au/content/04-tax-reform.htm?utm_source=openai)) ## Actionable Insights for Trustees and Beneficiaries - **Review Trust Deed**: Consider whether current deed allows flexibility in distributing to corporate vs non-corporate beneficiaries. Use corporate beneficiaries where advantageous. - Plan distributions ahead of 2028 to take advantage of existing rules if beneficial, while ensuring any changes align with tax law. - **Record Keeping**: Benefit from maintaining clear records of cost base, dates of acquisition, improvements vs maintenance, and attribution of beneficiary type. - **Seek restructuring**: Some trust arrangements may benefit from shifting assets or beneficiaries before 2027/28 to avoid minimum tax exposure. ## Example Scenarios - A discretionary trust distributes to a spouse (non-corporate). Post-1 July 2028, 30% tax applies. If instead distribution is made to a private company they can circumvent minimum tax—subject to deed powers and tax law. - If the trust holds appreciated shares bought in 2010, selling after 1 July 2027 invokes CGT with indexation + minimum 30%, not the 50% discount, possibly increasing the capital gains tax liability. ## Compliance Best Practices - Start modelling trust tax projections for 2027-28 now. - Ensure the trust deed is flexible, or consider amending (if allowed) to facilitate different beneficiary classes. - Engage actuary or tax adviser for trusts with mixed assets. - Discuss with beneficiaries the implication of receiving distributions and possible tax obligations in advance of the 2028 tax year. ## Broader Considerations - These reforms may encourage more use of company structures for passive income. - Greater alignment with shareholders/beneficiaries regarding distributions is required. - Increased compliance could raise costs, especially for smaller family trusts. ## Conclusion Trustees and beneficiaries have a lead time—around 18–24 months from Budget night—to adapt. Early simulation and legal/tax structuring can save significant tax dollars.