The Trust Tax Bill: What It Means for Your Family Trust

The trust tax is in Parliament. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 went into the House of Representatives on 14 October 2026, and the next day it was sent to a Senate committee, which is due to report on 13 November. It is a bill, not law, and it can still change.

In September we went through the draft in Minimum Tax on Discretionary Trusts: What the Draft Law Actually Changes. Most of that still holds. This post covers what's in the bill that we didn't cover then: a way back from an honest mistake, a share for charities, restructures into an entity you already have, and the fix for the 15-year exemption.

Prefer to listen? We covered this in The Trust Tax Goes to Parliament: What's New in the Bill, episode 64 of the Aevum Accounting Podcast.

What hasn't changed since the draft

Most of it. The minimum tax still starts on 1 July 2028. The trustee still pays 30% on the trust's net income, and beneficiaries still include their share in their own returns with a credit for what the trustee paid. That credit still can't be refunded or carried forward, so if it's more than the tax you owe, the difference is simply gone. A bucket company still gets no credit at all, so it pays its own tax on top of the trustee's 30%. And there are still two ways out: elect to fix your distributions, or restructure with rollover relief. It's one or the other, never both.

The election is still one shot

One election, in the first year only. A trust that exists on 1 July 2028 can elect once, in that first year, nominating its beneficiaries and a fixed percentage for each. Distribute the way you nominated, and the minimum tax doesn't apply. Break it, and the election is revoked and can never be made again. For that year, the trustee pays the top rate plus Medicare, 47%, on all of the trust's net income. That's why the election has to suit your family for good, not just for next year.

A way back from an honest mistake

The bill has a safety valve. If a distribution doesn't match the nomination, the trustee can apply to the Commissioner to decide that revoking the election would be unreasonable. If the Commissioner agrees, the election stays in place and the penalty doesn't apply. The explanatory memorandum says it's meant for inadvertent errors or genuinely exceptional circumstances, like a small mistake that made no real difference, or a trustee who became ill not long before 30 June. It isn't a free pass. Deciding to distribute differently because the family's circumstances have changed is a choice, not an error, and the discretion isn't meant for it. You have to apply by the deadline for notifying the Commissioner. And a nominated company being deregistered, or changing shareholders other than on a death or a separation, still revokes the election automatically.

A share for a class of charities

Families that give can still elect. In September we said the percentages could only change if a nominated beneficiary died or two of them separated. The bill also lets the trustee set one percentage for registered charities and deductible gift recipients as a group, and the charities that actually receive it can change from year to year. They have to be beneficiaries under the deed on 1 July 2028, and each one has to actually be paid by the end of the following year. If one isn't, the election can be revoked going right back to the year it was entitled, though that is the second case the Commissioner's discretion covers. Sporting clubs can't be in the class.

Restructuring into an entity you already have

Same window, more choice of destination. A trust can still restructure with rollover relief from 1 July 2027 to 30 June 2030. The bill makes clear the assets can go to an entity you already have, with its own assets and history, not just a brand new one. The conditions are still strict. It's all of the trust's assets, apart from a short list of exceptions, to one entity, and anything the trust picks up after the first transfer has to go across by 30 June 2030 as well. By the end of that period, the trust can't still hold shares or units in the entity that took the assets. The rollover doesn't touch stamp duty, GST or FBT, and on a trust that owns land, the duty bill is often what decides it.

Which way most trusts are expected to go

Treasury's assumption favours the election. Treasury has put its working assumption in the explanatory memorandum. For business trusts that need a lot of advice, it assumes 70 to 90 per cent will elect and only 10 to 30 per cent will restructure, while saying nobody can predict it accurately. Most trusts are expected to do neither.

The 15-year exemption fix is in the same bill

The follow-up to last week. In our post on the CGT reset for business owners we said the 15-year exemption was the one small business concession not protected through the 1 July 2027 reset. The fix is now in this bill. If it passes, the reset is ignored when you work out whether the exemption applies, and the age, retirement and other tests are applied when you actually sell. In the explanatory memorandum's example, an owner who is 54 at the reset and 56 and retiring when she sells is tested at the sale, so the exemption can cover the gain. It would apply from 2027-28. Some rollovers after the reset, like a relationship breakdown or assets passing from a deceased estate, are still left for a further bill. And a restructure under the trust rollover keeps the asset's original ownership date, so the 15-year clock doesn't restart.

What to do before the committee reports

Three things. Get the trust deed out, because for the election every nominated beneficiary, and any charity, has to be in the deed on 1 July 2028. If the trust owns land or business assets, get the stamp duty number for a restructure, because that usually decides it. And don't restructure on the strength of a bill, even though the window opens next July. Model both paths now, and decide when it's law.

If you have a trust and you'd like the team to work through the election and the restructure for your situation, book a consultation with our team. Our small business accountants in Perth can model both paths for your trust. If you're already a client with a trust, you don't need to chase this. If and when it becomes law, the team will contact you to book a meeting and go through the options.

The information in this article is general in nature and does not take into account your personal circumstances. It does not constitute specific tax or financial advice. Everyone's situation is different, so we recommend speaking with a qualified professional at Aevum Accounting before acting on anything you have read here.