Entity Setup
Planning Your Entity Structure in Australia under New Trust & Superannuation Rules
Recent Budget proposals and actions promise changes to tax treatment of super balances above $3 million and to concessions for trusts—important for anyone structuring their wealth or planning intergenerational transfers.
By NomadicTax Research Team • 5-8 min read • March 17, 2026
## Why Super & Trust Rules Are Back in the Spotlight
Australia is reviewing **tax concessions for superannuation balances over $3 million**, and the Government has proposed **changes to Better-Targeted Superannuation Concessions (Div 296)**. These reforms are aimed at improving fairness and long-term sustainability. ([ato.gov.au](https://www.ato.gov.au/media-centre/key-developments-in-tax-administration-in-australia?utm_source=openai))
Simultaneously, there's elevated ATO enforcement focus on **family trusts**, holiday-home deductions, income splitting, and ensuring trusts are structured with clear substance. Compliance risk has risen in these areas. ([rsm.global](https://www.rsm.global/australia/tax-insights/ges-update/global-employer-tax-update-january-2026?utm_source=openai))
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## Key Considerations for Entity Setup
- **Superannuation balances above $3 million**: If proposed laws pass, concession reductions may affect concession rates on earnings for large super balances. Entities or individuals considering large super contributions must model their effective tax burden under new thresholds. ([ato.gov.au](https://www.ato.gov.au/media-centre/key-developments-in-tax-administration-in-australia?utm_source=openai))
- **Trusts & Family Structures**:
* Avoid aggressive income splitting into low bracket entities unless there's a genuine economic role or function.
* Document trust deeds carefully; maintain arms-length dealings.
* Regularly review distributions and beneficiary roles, as ATO scrutiny is increasing.
- **Div 296 and Better Targeted Super Concession Measures**: The start date of changes might shift; legislation to update these was signalled to come in early 2026. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/sites/default/files/2025-11/PLS_working_group_Key_Outcomes_21_October_2025.pdf?utm_source=openai))
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## Example: Structuring for Two Generations
A parent sets up a discretionary trust driving income via investments and distributes income to adult children to take advantage of lower tax brackets. Under new focus, the ATO may challenge distributions lacking economic substance or where tax avoidance is evident.
Similarly, an individual with significant super balance should avoid bringing in large contributions that push total above $3 million without understanding anticipated changes in how earnings on balances over that threshold will be taxed.
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## Actionable Steps Before Reforms Fully Kick In
- Review existing entity structures, trust deeds, and super balances and assess sensitivity to proposed thresholds.
- Run modelling scenarios for tax under current law vs proposed concessions to see when reforms may bite.
- Stay up-to-date on Div 296 legislative progress and announced start dates.
- Consult advisors when structuring new entities or reorganizing family wealth to ensure alignment with likely compliance risks.
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Setting up an entity structure now without accounting for incoming trust and super reforms risks being locked into inefficient or high-tax arrangements. Proactive review can save major costs and reduce risk of ATO-led adjustments later.