Daniel Cole
Managing Director
Commercial and Succession Planning
What has been announced
Since the Government announced its intention to introduce a 30% minimum tax on the taxable income of discretionary trusts from 1 July 2028, many questions have arisen about whether existing client structures should be restructured and what any transition to a new structure might involve. At this stage, the answers are not yet clear, and any attempt to anticipate the most appropriate structure should be approached with caution.
It appears that the intention is to, post 1 July 2028, end the days of treating trusts as flow-through vehicles for tax planning purposes. If that is ultimately the case, asset ownership structures may need to change from what has traditionally been regarded as best practice.
Trusts and income excluded from the proposal
The minimum tax is not expected to apply to other types of trusts, including fixed and widely held trusts, fixed testamentary trusts, complying superannuation funds, special disability trusts, deceased estates, and charitable trusts.
Certain income is also expected to be excluded, including primary production income. What is clear is that these measures will be complex to implement. The Government has indicated that rollover relief will be available to assist with transitions to new structures. However, for many restructures to be fully effective, cooperation at both State and Territory level will also be required.
What clients should do now
While these announcements have created considerable uncertainty, it is important to remember that they are, for now, policy objectives only. The detail will be critical. Until further information is available, the preferred approach is to continue implementing structures that are appropriate to current circumstances and compliant with the legislation and regulatory requirements that apply now. If restructure rollover relief is ultimately introduced, any necessary adjustments can then be considered with greater certainty.
Understanding the full landscape before making major structural changes is essential. While tax planning remains a key consideration when establishing asset ownership structures, asset protection and succession planning must also remain central to that process.
Next steps
This advice is of a general nature only and is based on information available at the time of writing. We will continue to update our communications as further details emerge. In the meantime, if you would like to discuss how these proposed changes may affect you or your plans, please do not hesitate to contact our team on 5334 3333.
Article written by Daniel Cole, Director of Commercial & Succession Planning at Beck Legal
