AUSTRALIA Trends and Developments Contributed by: William Moore, Frank Hinoporos, Emma Woolley and Todd Bromwich, Hall & Wilcox
Hall & Wilcox Level 31, Queen & Collins Tower
376-390 Collins Street Melbourne VIC 3000 Australia
Tel: +61 396 033 555 Fax: +61 396 709 632 Email: william.moore@hallandwilcox.com.au Web: www.hallandwilcox.com.au
2026–27 Federal Budget Australia’s 2026–27 Federal Budget introduced sig - nificant and wide-reaching tax reform proposals. The proposed measures will have material consequences for property investors, private business owners and family groups who use trusts as an asset-holding or intergenerational wealth planning structure. Given the breadth of these changes, taxpayers must understand their possible impact and consider whether existing structures continue to facilitate short, medium and long-term family and wealth planning strategies. The key reforms and their implications are summa - rised below. Introduction of a minimum 30% tax on discretionary trusts From 1 July 2028, trustees of discretionary trusts will pay a minimum 30% tax on the taxable income of the trust. Beneficiaries other than corporate beneficiaries will receive non-refundable tax credits for the tax pay - able by the trustee. Corporate beneficiaries receiving no credit will disincentivise distributions from trusts to corporate beneficiaries. This is a significant departure from the current trust taxation model, where trusts are treated as fiscally transparent structures and trust income is taxed to beneficiaries on distribution, and only to trustees if accumulated at the trust level. At the time of writing, this measure is subject to ongoing public consultation and is not yet legislated. Its pre - cise scope and application may change. This reform is expected to reduce the tax planning advantages traditionally associated with discretionary
trusts, and may diminish the benefits of trusts as vehi - cles for income distribution and wealth management. High net worth individuals and families should review existing ownership structures and carefully consider alternative structure options for new investments, such as companies, superannuation funds or direct ownership by individuals, having regard to both tax and non-tax considerations. For those wishing to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust, capital gains tax (CGT) rollover relief will be available for three years from 1 July 2027. Care will be required in undertaking any restructure of exist - ing ownership arrangements. While CGT relief may be available, there may be other tax impediments to restructuring, such as duty, payroll tax, land tax, and goods and services tax implications. There may also be broader commercial considerations, including diminished asset protection afforded by fixed owner - ship structures compared to discretionary trusts. Introduction of a minimum 30% tax on capital gains and removal of the 50% CGT discount From 1 July 2027, the 50% CGT discount, which is generally available to reduce the capital gains realised by Australian tax residents on the disposal of capital assets owned for 12 months or more, will be abol - ished and replaced with cost base indexation (that is, broadly, allowing the purchase cost of an asset to be indexed for inflation). The changes will apply to all CGT assets held by individuals, trusts and partner - ships. Companies cannot access cost base indexa - tion.
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