The team covered topics such as:

• Understanding the proposed 30% minimum tax and who will and won’t be affected
• The new definition of a fixed trust and whether it represents welcome reform or creates new uncertainty
• Practical tips and common pitfalls when electing beneficiaries as ‘fixed’ beneficiaries
• Exploring what is and isn’t permitted under the new rules and whether restructuring is possible

Webinar

Expert speakers

Abi Chellapen
Director
SW

Blake Rodgers 
Director
SW

Vanessa Priest
Director
SW

Ned Galloway
Associate Director
SW

The post Minimum Tax Trust Changes webinar appeared first on SW Accountants & Advisors.

The proposed measures, the bulk of which would come into effect from 1 July 2028, would:

• impose a 30% minimum tax on the net income of most discretionary trusts
• deny credits for that minimum tax to corporate beneficiaries
• introduce from 1 July 2027, a broad three-year roll-over relief regime to facilitate restructures from discretionary trusts to individuals, companies, and fixed trusts
• introduce an optional excluded election trust (EET) regime allowing certain existing discretionary trusts to avoid the minimum tax by effectively pre-nominating beneficiaries and fixed distribution percentages
• replace the existing income tax definition of fixed trust with a significantly broader principles-based definition, with fixed trusts also being excluded from the minimum tax regime
• introduce a number of exclusions for testamentary trusts, primary production income, charities, deductible gift recipients (DGRs), and certain other trust structures.

These measures represent one of the most significant reforms to discretionary trust taxation in decades and have the potential to materially alter the attractiveness and commercial viability of existing trust structures. The measures are broadly consistent with the exposure draft (ED) which SW had previously provided submissions on here.

Unfortunately, the draft legislation introduced does not appear to have made any material changes recommended as part of the feedback provided by SW or other stakeholders.

How does the tax operate?

From income years commencing on or after 1 July 2028, trustees of affected trusts, referred to in the legislation as minimum tax trusts, will be liable to pay tax at a minimum rate of 30% on ‘minimum tax income’. Several categories of income are excluded from minimum tax income, including:

• primary production income
• certain income relating to vulnerable minors
• income allocated to registered charities, tax exempt entities, and DGRs
• distributions to foreign beneficiaries subject to withholding-tax and conduit foreign income rules
• eligible testamentary trust income.

Corporate beneficiaries remain adversely affected

One of the most controversial features of the proposal has been retained, namely, that a corporate beneficiary of a minimum tax trust:

• remains assessable on trust income under ordinary rules
• does not receive any offset for the minimum tax paid by the trustee.

For minimum tax income, this would generally mean that such income distributed by a minimum tax trust to a company will bear tax at 60%.

New definition of fixed trust

The Bill repeals the existing fixed trust definition and replaces it with a broader principles-based test. Under the new regime, a trust may qualify as a fixed trust where either:

• beneficiaries have fixed entitlements
• there are no material discretionary elements capable of significantly affecting beneficiaries’ rights to trust income or capital.

Importantly, the following ordinary discretionary powers, commonly found in most trust deeds, will not necessarily prevent a trust from being treated as fixed:

• amendment powers
• issue and redemption powers
• administrative powers
• certain governance provisions.

Managed investment trusts

The ED legislation provides the Minister with the power, by legislative instrument, to determine that trust estates of a certain kind are not minimum tax trusts, including if the Minister is satisfied that each trust estate of that kind has widely held membership or is used for collective investment by pooling the contributions of members. We hope that this mechanism will be used to confirm that managed investment trusts (MIT) are fixed trusts, although this remains to be seen.

Testamentary trust concessions

Discretionary testamentary trusts established for genuine testamentary purposes are excluded from the proposed 30% minimum tax, as are deceased estates. This means eligible testamentary trust income continues to be taxed under the existing trust rules, including the ordinary adult tax rates available to minors on excepted trust income.

Transitional roll-over relief

Consistent with the exposure draft, a concession is provided to enable a restructure of trusts into a new vehicle. This dedicated roll-over regime is proposed to be available from 1 July 2027 to 30 June 2030.

The measure is intended to facilitate transfers of assets from discretionary trusts into:

• companies
• fixed trusts
• other eligible fixed structures.

Key conditions

The regime contains a number of requirements including:

• the requirement that all assets of the trust be transferred to the new vehicle, subject to certain limited exceptions, remains a major point of criticism, as the existence of dutiable property in a trust may significantly deter access to roll-over relief
• continuity requirements (broadly ensuring consistency of underlying ownership) must be satisfied
• residency requirements
• a requirement that no material discretionary elements exist within the resulting (transferee) structure for a prescribed period
• elections and notifications must be provided to the Commissioner.

Excluded election trusts (EETs) — alternative to restructuring

A second transitional measure is the introduction of an EET regime. Rather than restructuring, an eligible discretionary trust existing on 1 July 2028 may elect to become an EET. An EET will not be treated as a minimum tax trust subject to the 30% tax impost while the election remains effective.

An EET election can only be made for trusts that are in existence on 1 July 2028 and requires trustees to nominate:

• each beneficiary
• fixed percentages of income and non-income earnings.

The nomination generally cannot be later changed except in limited circumstances such as:

• death of a nominated beneficiary
• relationship breakdown.

Revocation consequences

If an EET fails to comply with the beneficiaries and proportions nominated in the EET election:

• the election is automatically revoked
• for the year income to which the revocation occurs, the beneficiaries are treated as not being presently entitled to the income of the trust, which means that the trustee would be assessed under section 99A at the top marginal rate plus Medicare levy
• in subsequent years, the trust would become subject to the minimum tax regime thereafter.

A trustee also has a once-only opportunity to voluntarily revoke an EET election.

SW comments

The proposed legislation represents a major change to the taxation of family groups and private investment structures. For many existing discretionary trusts, particularly those utilising company beneficiary arrangements, the following measures, in combination, may significantly increase effective tax costs:

• a trustee-level 30% minimum tax
• denial of offsets to corporate beneficiaries.

While the Government has provided both roll-over relief and the EET regime as transition mechanisms, each option contains technical requirements and potential commercial implications that should be carefully considered well before the proposed 1 July 2028 commencement date.

SW can model the impact of the minimum tax on your current structure, assess whether existing arrangements remain fit for purpose, and evaluate the three practical paths — rollover, EET election, or accepting the minimum tax — including the interaction with State duty.

Please contact your SW advisors to discuss how these proposed changes may affect you or your clients.

Contributors

Ned Galloway | Associate Director, Tax

The post Trust in the detail, part three: The minimum tax on trusts Bill appeared first on SW Accountants & Advisors.

The report highlights a continued focus on ensuring taxpayers are correctly reporting GST and maintaining effective tax governance frameworks, while also introducing a structured three-tier model used by the ATO to identify behaviours and transactions that may present GST risk, namely real property transactions and accommodation arrangements.

Key findings from the Top 1,000 GST Assurance Program

The ATO reported that between 1 July 2019 and 30 June 2026 it completed 1,034 GST reviews covering 860 taxpayers. As of 30 June 2026, 46% of taxpayers within the Top 1,000 population had achieved a high assurance rating, 49% achieved medium assurance, and 5% remained at low assurance. The ATO noted an encouraging trend of taxpayers improving their assurance ratings over time, with governance remaining one of the most significant barriers to achieving high assurance.

The report also emphasises the importance of GST governance, data integrity, and transaction testing. The ATO observed that taxpayers with well-designed and documented GST control frameworks are significantly more likely to achieve higher assurance outcomes.

The ATO’s three-tier model

A notable feature of this year’s report is the alignment of GST assurance activities with the ATO’s Public and Multinational Business Three-Tier Model (3TM). The model is designed to identify the key behaviours, events, and focus areas that drive tax performance and compliance outcomes.

Tier 3 identifies the specific transaction type and industries that the ATO considers warrant closer attention. The ATO’s current GST focus areas include:

• treatment of significant or unusual transactions involving financial supplies (e.g. financial acquisition threshold)
• treatment applied by financial services, investment, and insurance industries (e.g. GST apportionment, reduced input tax credits, reverse charge)
• the GST classification of food and health products
• reporting of GST on low value imported goods and inbound intangible supplies by offshore entities
• treatment applied to real property transactions and accommodation.

Real estate emerges as key focus area

Of particular interest is the ATO’s identification of real property transactions and accommodation arrangements as a specific Tier 3 focus area, with 15% of issues that received a separate assurance rating for this risk area in the 2025–26 financial year obtaining a low or red flag assurance rating. These issues particularly relate to the application of the margin scheme, GST-free farmland provisions, claiming of input tax credits in relation to the supply of residential accommodation, and GST treatment of build-to-rent (BTR) developments.

While the report does not introduce new GST rules for real property, its inclusion in the ATO’s formal risk framework is a clear signal that property transactions remain a significant area of concern from a GST assurance perspective. The GST outcomes of property transactions can be a complex technical issue and involve significant value.

Property funds, developers, and real estate investment groups may face increased scrutiny of matters such as land acquisitions and disposals, leasing arrangements, development structures, going concern concessions, margin scheme eligibility, and input tax credit entitlements. Given the volume, value, and complexity of transactions undertaken across the sector, the ATO is likely to continue closely examining the GST treatment adopted by property funds for both day-to-day operations and significant transactions.

BTR draft guidance may assist property funds

Against this backdrop, the ATO’s ongoing work on GST guidance for modern BTR developments may provide welcome clarity for the property sector.

The ATO is currently developing an addendum to GSTR 2012/6 dealing with commercial residential premises. The draft update was issued following recognition that modern BTR developments often have characteristics that differ from traditional residential accommodation and can involve complex questions regarding whether premises should be characterised as residential premises or commercial residential premises for GST purposes.

For more information, see our previous alert on draft ruling GSTR 2012/6DC, available here.

For property funds investing in the growing BTR sector, the finalised ruling is expected to provide greater certainty when structuring developments and assessing GST outcomes.

How SW can help

The ATO’s latest GST assurance findings reinforce that strong GST governance and accurate transaction reporting remain critical to achieving a high assurance rating. The inclusion of real property transactions and accommodation arrangements as a specific GST focus area highlights the ATO’s continued scrutiny of the property sector, particularly property funds, developers, and real estate groups.

The ATO’s draft guidance on BTR accommodation is a welcome development, providing greater certainty in an area that has historically presented GST issues. Property funds should carefully assess and document the GST treatment of their property transactions, particularly significant acquisitions, disposals, and development arrangements, to ensure they are well positioned for future ATO reviews.

SW’s indirect tax specialists have extensive experience advising on the GST treatment of property transactions and accommodation arrangements. If you would like to review the GST treatment adopted for your property activities, please contact your SW advisor.

Contributor

Dylan Kelly | Senior Consultant, Tax

The post ATO sharpens GST focus on real property in Top 1,000 Assurance Program appeared first on SW Accountants & Advisors.

Background

Following Royal Assent of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 on 26 June 2026, from 1 July 2027 the 50% capital gains tax (CGT) discount for individuals, trusts, and partnerships is replaced with cost base indexation, and a 30% minimum tax on capital gains applies.

Following the 2026-27 Budget, the Government undertook to consult on the treatment of early stage and start-up businesses, recognising that these businesses often hold assets that are difficult to value and can grow rapidly from a low-cost base. A consultation paper was released on 18 June 2026, and this exposure draft is the result.

The concession

A new 50% discount applies to a discount capital gain where:

• the CGT event happens on or after 1 July 2027 in relation to an IBCC asset
• the asset is not a disqualified asset at the time of the CGT event
• the taxpayer has not chosen cost base indexation instead
• the taxpayer is not a company, complying superannuation entity, or foreign resident.

Gains that attract the innovative business CGT concession (IBCC) discount are excluded from the minimum tax on capital gains and from the deemed sale and reacquisition rules operating across 30 June and 1 July 2027. If indexation is chosen instead, those rules apply in the ordinary way.

IBCC assets

An IBCC asset is a CGT asset that is, or can become, an equity interest in a company, such as shares, options (including warrants) to acquire shares, and convertible notes that are not debt interests. The explanatory materials note this will often capture SAFEs, depending on the legal character of the instrument.

The asset must also:

• be at risk – there must be no arrangement maintaining the value of the asset or its returns
• be issued directly by the company to the investor, excluding secondary market acquisitions
• be issued at a time when the company was an IBCC company
• be held for at least three years, unless the interests are acquired under a takeover or similar scheme covering all or substantially all interests.

Modified rules apply for beneficiaries of trusts and members of AMITs, employee share trusts, shares acquired on exercise, or conversion of a qualifying option or note, most replacement asset rollovers (excluding Division 122 and scrip for scrip), and assets passing on death or relationship breakdown.

Carried interests

The discount extends to CGT event K9 gains from carried interest entitlements of general partners in VCLPs, ESVCLPs, and AFOFs, and limited partners in VCMPs, to the extent the gain is reasonably attributable to an IBCC asset. The direct issue and three-year holding requirements are tested at the level of the relevant partnership.

IBCC companies

A company must satisfy the following conditions:

The Industry Secretary may specify safe harbour conditions for the innovative company test by legislative instrument. Satisfying a safe harbour does not make a company an early-stage innovation company for any other purpose.

Ineligible activities

The predominant activity test excludes activities comprising of:

• property development or land ownership
• banking
• provision of capital
• leasing
• factoring and securitisation
• insurance
• infrastructure construction or acquisition
• passive investment directed to interest, rents, dividends, royalties, or lease payments
• gambling, tobacco, and vaping technology outside the harm minimisation carve-outs.

Importantly, developing technology for use in relation to finance, insurance, or passive investment activities is not an ineligible activity.

Registration, reporting & disqualification

Registration is administered by the Industry Secretary (currently the Department of Industry, Science and Resources) rather than the ATO, and may be backdated where the company notifies the Secretary and affected interest holders.

Registered companies must lodge annual reports. Failure to do so results in automatic suspension, and cancellation if the report remains outstanding at the end of the income year in which it was due. Registration may also be cancelled for fraud, serious misrepresentation, or reliance on untrue, incorrect, or incomplete information, in some cases with the company treated as never having been registered.

An IBCC asset becomes a disqualified asset where the company ceases to meet the predominant activity test, its registration ceases to have effect, or the Secretary makes a disqualification determination. A company that has met the predominant activity test for at least 20 years is treated as not having ceased to meet it.

Section 170 of the Income Tax Assessment Act 1936 will not prevent amendment of assessments to give effect to suspension or cancellation of registration, effectively removing the period of review for these matters.

Rulings by the Industry Secretary

New Division 363 of Schedule 1 to the Taxation Administration Act 1953 empowers the Industry Secretary to issue public and private rulings on whether a company is an IBCC company and whether an asset is a disqualified asset.

A private ruling given to a company also applies to entities holding CGT assets issued by that company and to beneficiaries of trusts holding such assets. Rulings bind both the Secretary and the Commissioner, and the Commissioner is excluded from ruling on those provisions. Decisions are subject to internal review and then review by the Administrative Review Tribunal.

Transitional rules

Assets issued before 1 July 2027 can qualify where the company registers before the relevant CGT event and, broadly, the company:

• was incorporated for less than 15 years on 30 June 2027, and is not an affiliate of an older company
• is unlisted at registration, unless it was listed before 11 September 2026, being the date the exposure draft was released
• satisfies the Australian residence, staff, and asset tests at registration
• had aggregated turnover under $50m and met the innovative company and predominant activity tests in the later of the 2025-26 income year or the year of incorporation.

SW comment

The IBCC is a meaningful carve-out from the CGT reform package, but it is a narrow and heavily administered one. Three features warrant particular attention.

• First, the direct issue requirement confines the concession to primary capital contributions. Secondary market acquisitions are excluded, which will materially affect later stage investors and secondary funds.
• Second, the treatment of widely held trusts remains unresolved. The explanatory materials expressly state that the Government is still considering how the direct issue requirement should apply to managed investment trusts, AMITs, and other widely held trusts, having regard to proportionate compliance impacts. Fund managers should treat this as a live issue.
• Third, the ineligible activities list is broad. Banking, provision of capital, leasing, factoring, securitisation, and insurance are excluded, as is property development. The carve-back for technology developed for use in those activities is the critical distinction for fintech and proptech businesses, and its boundaries are untested.

The shift of gatekeeping to the Industry Secretary, combined with annual reporting, automatic suspension, and the removal of the period of review, places significant ongoing compliance weight on investee companies, with the consequences borne by their investors.

How SW can help

SW’s Tax Consulting team can assist with:

• assessing eligibility under the proposed IBCC regime
• reviewing existing investment and fund structures
• preparing submissions to Treasury during consultation
• advising founders, employees, venture capital investors, and fund managers
• modelling the interaction of the IBCC with the broader CGT reform package.

For further information, please contact your SW advisor.

The post New 50% CGT discount proposed for investments in innovative start-ups appeared first on SW Accountants & Advisors.

Introduction

On 3 September 2026 the Government released exposure draft legislation (ED) implementing the core components of the 30% minimum tax regime (MTR) for discretionary trusts, with consultation closing on 18 September 2026. The package confirms a 1 July 2028 start date and introduces two response pathways for affected trusts:

• transitional rollover relief
• a new excluded election trust (EET) election.

Following our 31 July 2026 submission on the Consultation Paper, SW has lodged a second submission responding to Treasury’s exposure drafts on ‘Minimum Tax Trusts’. We welcome several features of the draft relative to earlier announcements; in particular a broader fixed trust definition, the carve-out for distributions to charities, not-for-profits and tax exempt, the refund model for excess franking credits, and the availability of offsets through chains of trusts. However, a number of issues and anomalies remain that, in our view, require further consideration before the measures are settled.

What SW has submitted

The fixed trust definition should turn on the exercise of powers, not their existence

Almost every professionally drafted trust instrument contains powers to amend the deed, to issue or redeem units, to characterise receipts as income or capital, or to create classes of interests. Under the proposed changes, the mere existence of such a power appears capable of denying fixed trust status. The result is that a very large population of trusts that are, in economic substance, entirely fixed, including the vast majority of single class unit trusts, would be treated as discretionary by default.

We have submitted that unexercised powers, subject as they are to fiduciary constraint, should be disregarded unless and until exercised in a way that materially alters defined entitlements, consistent with safe harbour 6 in PCG 2016/16.

MITs, widely held trusts & employee share trusts need to be expressly excluded

The Explanatory Memorandum and the Treasurer’s media release states that MITs, widely held trusts, and employee share trusts will fall outside the MTR. In our view that outcome is not clear on the text of the law. Absent express inclusion in the fixed trust definition, these trusts will need to review and amend their constitutions, an avoidable cost, with real practical difficulty for schemes regulated under the Corporations Act 2001 where member resolutions are required, and with potential State duty exposure. At a minimum, there should be a statutorily binding safe harbour along the lines of PCG 2016/16 that does not depend on the exercise of the Commissioner’s discretion.

The EET regime is a useful concept but needs more flexibility

We support the logic of the EET regime, which allows a trust to be notionally fixed for tax purposes without surrendering the asset protection that a discretionary structure offers. To be workable, we have submitted that:

• the grounds for varying an election be expanded beyond death and relationship breakdown, to include bankruptcy, legal disability, or incapacity of a nominated beneficiary
• the definition of eligible company be tested on the same ‘exercise, not existence’ basis as the fixed trust definition
• availability be extended to trusts established on or after 1 July 2028, or at least to 30 June 2030 to align with the proposed rollover window
• distributions of corpus that are not capital gains should not be constrained by the election
• automatic revocation of the EET not be triggered by an accumulation of income assessed under section 99A, by the application of section 100A, or by distributions to registered charities and tax exempt.

We have also flagged the trustee risk highlighted by Owies v JJE Nominees Pty Ltd, and the residual uncertainty as to whether making an election could attract duty in some states, a point that will need confirmation from each revenue authority if the regime is to be relied upon.

Rollover relief should not be defeated by dutiable property

The requirement that all trust assets be transferred means that a trust holding dutiable property is effectively forced to choose between a duty cost and the minimum tax. As a trust cannot both elect the EET regime and access the rollover, income from any retained assets remains within the MTR in any event. We see no policy or integrity basis for the duty impost and have submitted that the carve-outs be expanded.

Testamentary trusts, primary production & corporate beneficiaries

We have renewed three points from our earlier submission.

• The testamentary trust exclusion should operate by reference to distributions actually made to individuals and exempt entities, rather than requiring existing wills to be rewritten.
• The primary production exclusion should extend to income derived from the use of land or assets by a related entity carrying on a primary production business — a very common rural ownership structure.
• The double taxation of distributions to corporate beneficiaries, which produces an effective rate of 60%, rising to 69% on payment to a top-rate shareholder, remains sufficiently harsh that we have again urged the Government to reconsider it.

Consultation process

While we welcome Treasury’s adoption of several points raised in the first round of consultation, a consultation period of 11 working days is too short for reforms of this scope and depth, particularly where the bulk of the changes do not commence until 1 July 2028. We have recommended that more time be allowed for future tranches.

What this means for you

The regime will have significant consequences for private business and family groups using trusts, particularly those with corporate beneficiaries. It may also affect commercially fixed unit trusts, managed funds, primary production structures, testamentary trusts, and groups weighing a restructure ahead of 1 July 2028.

How SW can help

SW can model the impact of the minimum tax on your current structure, assess whether existing arrangements remain fit for purpose, and evaluate the three practical paths — rollover, EET election, or accepting the minimum tax — including the interaction with State duty.

Please contact your SW advisors to discuss how these proposed changes may affect you or your clients.

Contributors

Ned Galloway | Associate Director, Tax

The post Trust in the detail, part two: SW responds to the minimum tax trust exposure draft appeared first on SW Accountants & Advisors.

While the ruling sets out the ATO’s interpretation of the law, the draft Practical Compliance Guideline is arguably the more important document for many taxpayers because it provides a roadmap for understanding how the ATO intends to allocate its compliance resources. In simple terms, taxpayers can self-assess their arrangements into a risk zone ranging from white (lowest compliance risk) to red (highest compliance risk).

For CFOs, financial controllers, and technology businesses, the key question is often not whether software payments exist, but whether the ATO might consider part of those payments to be royalties that should be subject to royalty withholding tax. The new framework is intended to provide greater certainty around that issue.

Why has the ATO released this guidance?

The framework follows the High Court’s decision in PepsiCo and reflects the ATO’s view that economic substance and examining the totality of the arrangement may be relevant in identifying an embedded royalty, even where no royalty is expressly stated in the contract.

The guidance currently applies to software intermediation and distribution arrangements, with further schedules expected for other industries and transaction types.

Understanding the risk zones

Particular focus on restructures

The draft guidance includes a clear ATO warning on restructures.

The ATO may review changes to contractual or operating structures that reduce or eliminate Australian royalty withholding tax, even where the arrangement otherwise falls within a lower-risk zone. Transfer pricing, MAAL, DPT, and Part IVA may also be relevant.

Multinational groups undertaking software licensing or distribution restructures should therefore consider royalty withholding tax alongside transfer pricing.

Amber Zone example

A foreign software provider licenses ERP software to AU Software Co, an Australian related-party distributor, for supply to Australian customers. The agreement with the software owner grants AU Software Co the exclusive right to market and distribute the ERP software to Australian customers. However, it does not grant AU Software Co the right to make copies of, or modify, the ERP software. AU Software Co enters into customer contracts and receives payments from those customers, while the offshore supplier owns the software and provides the underlying platform and support. AU Software Co does not recognise any part of its payment to the offshore supplier as a royalty for Australian tax purposes.

On the facts in Example 8, the ATO would treat the arrangement as falling within the amber zone. The key risk indicators are that the Australian distributor is selling software-related products or services to Australian customers, the software and associated intellectual property are held offshore, and no Australian royalty has been recognised or subjected to royalty withholding tax.

The example illustrates that, where the relevant software rights and economic value sit offshore but Australian customer-facing activities are carried on locally, the ATO may expect taxpayers to undertake and document a more detailed royalty risk assessment.

By contrast, the risk assessment changes to the red zone where AU Software Co is also granted rights to make copies of, or modify, the ERP software. A red zone outcome may also arise where the software owner is located in a specified jurisdiction, or, generally speaking, is otherwise shielded from tax on the relevant income.

How SW can help

Businesses with cross-border software, SaaS, platform or technology distribution arrangements should review their existing arrangements against the framework. Even where no royalty has historically been recognised, the ATO expects taxpayers to be able to explain and support that position.

SW can assist in the following assessment:

• assessing where your arrangement is likely to sit within the ATO’s risk framework
• whether the undissected payments contain a royalty component
• whether sufficient documentation exists to support your position
• identifying whether practical steps are available to mitigate the relevant royalty withholding tax risk.

The release of TR 2026/2 and PCG 2026/D4 signals that software royalty arrangements will remain an area of significant ATO focus. Early assessment of risk positions and supporting documentation may help reduce the likelihood of future disputes and compliance costs.

The post What the ATO’s finalised software royalties ruling & draft guidance means for businesses appeared first on SW Accountants & Advisors.

The package includes three interconnected measures:

• a new 30% minimum tax on certain discretionary trusts from 1 July 2028
• a transitional roll-over relief regime available from 1 July 2027 to 30 June 2030
• an optional election regime allowing existing trusts to avoid the minimum tax without restructuring.

The draft provisions represent one of the most significant trust taxation reforms in decades and will require many family groups to assess whether their existing structures remain appropriate.

Overview of the proposed minimum tax

From income years commencing on or after 1 July 2028, trustees of certain discretionary trusts will be subject to a minimum tax rate of 30% on relevant trust income. Where applicable, the tax is imposed at the trustee level and is designed to ensure a minimum effective tax rate of 30%, applicable to trust income. Non-corporate beneficiaries will generally be entitled to a corresponding non-refundable tax offset in respect of the tax paid at the trust level.

In some good news, a broader range of trusts than previously announced will be excluded from the measures, including:

• fixed trusts as per a new broader definition of such trusts (see below)
• widely held trusts including managed funds
• genuine testamentary trusts
• trusts that distribute to exempt entities or deductible gift recipients (DGRs).

Unfortunately, the testamentary trust exclusion only applies where the beneficiaries of the testamentary trusts are individuals or exempt entities. In the earlier submission by SW, we asked Treasury to limit the application of the minimum trust on testamentary trusts to scenarios where the trustee had exercised a discretion in favour of a precluded entity. This would save significant resources from taxpayers that would need to amend wills to comply with the new rules, but this has not been taken into account by Treasury. We intend to make further submissions to Treasury on this issue.

New fixed trust definition

One of the more significant aspects of the exposure draft is the introduction of a new tax law definition of ‘fixed trust’.

Rather than relying solely on traditional fixed entitlement concepts, a trust may qualify as a fixed trust where there are no ‘material discretionary elements’ affecting beneficiaries’ rights or entitlements. The definition is intended to provide broader recognition for modern commercial trust structures and to ensure arrangements such as managed investment trusts, employee share trusts, and bare trusts are not inadvertently captured.

The proposed definition will apply more broadly across the tax law and will have implications beyond the minimum tax regime.

Concessions provided

To provide taxpayers some ability to bypass the impact of the new minimum tax trust rules, the exposure draft legislation provides some rollover relief for restructures and an alternative Excluded Election Trust (EET) regime. The draft legislation confirms that trustees of the same trust cannot access both the roll-over relief and the EET concession. Taxpayers must choose one pathway or remain within the minimum tax system. We have provided a summary for each of the items below.

Alternative 1: Electable regime for existing trusts

Rather than undertaking a restructure that may trigger duty costs, certain discretionary trusts existing on 1 July 2028 may elect into a new EET regime.

Under this regime:

• trustees nominate beneficiaries and fixed percentages of trust income and capital (which are required to be the same – that is, each nominated beneficiary must have the same percentage in relation to income and capital)
• the nominated percentages must total 100%
• the specified proportions must be maintained each year
• nominated beneficiaries generally cannot be changed, except in limited circumstances such as death or relationship breakdown
• the 30% minimum tax will not apply while the election remains effective.

However, the regime comes with significant rigidity.

If distributions are made inconsistently with the nomination, the election is automatically revoked. In the revocation year, beneficiaries are treated as though they were never presently entitled and the trustee becomes liable to tax on all trust income at the top marginal rate plus Medicare levy under section 99A. The trust then becomes subject to the minimum tax regime in future years. There is also a once-only opportunity for a trustee to voluntarily revoke the election, with similar results.

This election may be attractive for family groups seeking certainty and wishing to avoid the legal, commercial, and duty implications that can accompany restructures. However, it requires careful consideration of long-term succession and distribution objectives.

Alternative 2: Transitional roll-over relief

For groups wishing to move assets out of discretionary trusts, the Government has proposed a dedicated transitional roll-over regime available for three years from 1 July 2027 to 30 June 2030.

The relief is considerably broader than existing small business restructure provisions and is available irrespective of whether the trust carries on a business.

To qualify:

• the transferring trust must be within the scope of the minimum tax regime
• assets must be transferred to a single eligible transferee (individuals and company with single class shares, fixed trust, partnerships that are ultimately owned by individuals that are part of the family group)
• all required assets (there is an exclusion for primary production assets) must be transferred during the transitional period
• residency and continuity requirements must be satisfied
• the transferee must not contain material discretionary elements affecting members’ rights.

How SW can help

SW is actively advising clients on the practical implications of the proposed regime. Our team can model the impact of the minimum tax on your current structure, assess whether existing arrangements remain fit for purpose, and evaluate restructuring options ahead of the 1 July 2028 commencement, including the interaction with State duty. We will continue to keep clients informed as the consultation progresses and draft legislation is released.

Please contact your SW advisor to discuss how these proposed changes may affect you or your clients.

Contributors

Ned Galloway | Associate Director, Tax

The post Treasury releases exposure draft on the 30% minimum tax on discretionary trusts appeared first on SW Accountants & Advisors.

The draft guidance may affect crypto asset businesses, investors, and other Australian resident taxpayers. Importantly, wrapping or unwrapping a crypto asset may trigger a taxable event even where the taxpayer retains substantially equivalent economic exposure.

Airdrop arrangements

An airdrop generally involves an issuer distributing established or newly created crypto assets to a recipient. Airdrops may be used to reward the holder of another digital asset, promote a project, remunerate services, or distribute assets without the recipient’s prior knowledge.

TR 2026/D1 addresses the income tax consequences for Australian resident issuers and recipients. It does not apply where crypto assets are transferred in exchange for money or other crypto assets. The proposed treatment depends on the circumstances in which the airdrop occurs.

Crypto asset trading businesses

• Crypto assets held in the ordinary course of a crypto asset trading business may be trading stock.
• An issuer may be entitled to deduct expenditure incurred in providing an airdrop where the general deduction requirements are satisfied.
• A recipient may need to include the value of an airdropped crypto asset in assessable income.

Rewards, hobbies & other airdrops

Where a recipient receives crypto assets as a reward for services, promotional activity, or another income-producing activity, the market value of the assets when derived may be assessable as ordinary income. That value will also be relevant when determining the asset’s cost base or trading stock value for subsequent tax purposes.

An airdrop received in the course of a genuine hobby or recreational activity may not be ordinary income. However, the subsequent disposal of the asset may still have CGT consequences. Whether an activity is a business, income-producing activity, or a hobby depends on the particular facts.

Wrapping & unwrapping crypto assets

A wrapping contract is a smart contract that exchanges a crypto asset for a wrapped equivalent, usually so that it can operate on a particular protocol or platform that it would otherwise not be compatible with.

Under TD 2026/D2, the ATO’s preliminary view is that a taxpayer ceases to own the original crypto asset when it is transferred to the wrapping contract and instead receives a separate CGT asset in the form of the wrapped crypto asset. The ATO’s reasoning is as follows:

• CGT event C2 happens when the taxpayer’s ownership of the original crypto asset ends.
• The capital proceeds are generally the market value of the wrapped crypto asset received.
• The taxpayer compares those proceeds with the cost base of the original asset to calculate any capital gain or loss.
• Unwrapping may trigger a further CGT event when ownership of the wrapped asset ends and the original token is received.

This means wrapping and unwrapping may each create a tax liability despite the taxpayer maintaining broadly equivalent economic exposure before and after the transaction. The draft Determination applies only to the arrangements described in it. Other smart contracts and cross-chain arrangements may have different legal and tax consequences.

Alternative views

TD 2026/D2 acknowledges alternative views, including that the taxpayer may retain a continuing property interest in the original crypto asset or that another CGT event may be more appropriate. The ATO nevertheless concludes that CGT event C2 applies to the arrangements covered by the draft Determination and does not accept that the replacement-asset rollover in Subdivision 124-B is available merely because an economically equivalent wrapped asset is received.

The broader legal context — Poulton v Conrad

The characterisation of crypto assets under Australian property law is also before the High Court in Poulton v Conrad. The appeal was heard on 13 August 2026 and concerns whether Bitcoin can be the subject of a proprietary relationship and, if so, whether it is capable of possession for the purposes of the torts of conversion and detinue. Judgment remains reserved.

The appeal arose from Poulton v Conrad [2025] TASFC 7, in which the Full Court of the Supreme Court of Tasmania dismissed the appeal and endorsed the view that Bitcoin is intangible property capable of possession through control of the relevant private key. That reasoning contemplates a category of intangible property outside the traditional division between choses in possession and choses in action.

The High Court’s decision will not itself determine the income tax treatment of airdrops or wrapping arrangements. However, its analysis of the nature of a taxpayer’s proprietary interest in Bitcoin, and the significance of control through private keys, may be relevant to the legal assumptions underlying the ATO’s view that ownership of an original crypto asset ends when it is wrapped. This issue also goes to the heart of the ATOs position, outlined in TD 2014/26 that bitcoin is property at law and is a CGT asset.

Taxpayers should therefore monitor both the final ATO guidance and the High Court’s judgment.

What taxpayers should do

• Identify the legal and commercial terms of each transaction.
• Distinguish business, income-producing, and private or recreational activities.
• Record the date, quantity, and Australian dollar market value of assets received or disposed of.
• Retain wallet records, transaction hashes, smart contract details, and exchange data.
• Consider both ordinary income and CGT consequences.
• Review whether previous returns are consistent with the ATO’s draft views.
• Obtain advice before entering into significant or unusual arrangements.

How SW can help

SW can assist crypto asset businesses and investors in assessing the income tax and CGT consequences of airdrops, wrapping, and unwrapping, as well as determining whether activities amount to carrying on a business, reviewing valuation methods and transaction records, and identifying transactions that may have triggered previously unrecognised tax consequences.

We can also consider whether prior-year positions should be reviewed and prepare supporting analysis while the ATO guidance remains in draft.

Please contact your SW advisor if you would like to discuss how the draft guidance applies to your arrangements.

Contributors

Stephen Peries | Senior Manager, Tax

The post The ATO’s draft tax guidance on crypto airdrops & wrapping appeared first on SW Accountants & Advisors.

Join us for one of two practical sessions to understand what Payday Super means for your organisation and where issues may arise. We will also explore how SW can help, including through our new Payday Super tool.

Who should attend

These sessions are designed for professionals involved in managing, overseeing, or advising on payroll and superannuation obligations, including:

• payroll and remuneration professionals
• finance and accounting teams
• tax and superannuation specialists
• human resources and people teams
• governance, risk, and compliance professionals
• technology and systems teams supporting payroll processes
• senior leaders responsible for payroll governance and compliance.

What we’ll cover

• What Payday Super means in practice.
• Where things can go wrong.
• What to do when issues arise.
• How SW can support review and remediation.
• How technology can help, including SW’s Superannuation Reviewer solution.

Session details

Session 1 | Universities & higher education providers

Session 2 | All industries

Your presenters

Paul Hum

Director | Tax

SW

Will present the session, drawing on 15 years’ experience in payroll and employment tax, including complex payroll issues and remediation programs.

Stephen O’Flynn

Director | Tax

SW

Brings more than 25 years’ tax experience, including advising organisations across the higher education sector, and will facilitate the discussion.

The post Navigating the new requirements for Payday Super appeared first on SW Accountants & Advisors.

These updates provide further clarity on the 2026–27 Federal Budget reforms, outlining how key measures will operate in practice, as set out in the Government’s tax reform implementation announcement and legislated through the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026. The Bill and explanatory memorandum can be found here.

The latest announcements do not change the core direction of the Budget as highlighted in our FedBud 26 overview and FedBud 2026 follow-up webinar series. However, they begin to address key concerns raised during consultation, particularly in relation to targeted concessions and the treatment of testamentary trusts and capital gains tax (CGT) settings.

Key updates

Expanded access to CGT concessions

• The turnover threshold for the small business 50% active asset CGT concession is proposed to increase from $2m to $10m.
• This is expected to extend eligibility to around 98% of Australian businesses.

New support for startups and innovation

• A proposed Innovative Business CGT Concession introduces a 50% discount for early-stage investors, founders, and employee share scheme participants.
• Consultation is ongoing on how this concession will operate in practice.

Removed the power of the Minister to determine other assets that would retain the 50% CGT discount

• The types of assets that are able to access the 50% CGT discount are now locked in and can not be expanded by the Minister.

Introduction of a 30% minimum tax on discretionary trusts

• From 1 July 2028, a minimum 30% tax is proposed to apply to discretionary trust income.
• This represents a fundamental change to traditional income distribution strategies and is designed to limit income splitting.

Removing the ability for superfunds to use limited recourse borrowing

• In another blow to investors, self-managed super funds (SMSFs) will no longer be able to utilise limited recourse borrowing arrangements to acquire property.
• There are transitional arrangements that allow existing limited recourse borrowing arrangements to continue.

Removing the exemption for salary packaged work related items

• From 1 July 2027, eligible work-related items such as iPads, mobile phones, laptops, protective clothing, and tools of trade will not longer be exempt from fringe benefits tax (FBT) if salary packaged.

Testamentary trusts

• As part of the reform package, the Government confirmed in the media release that income from testamentary trusts will be exempt from the proposed 30% minimum tax, including discretionary testamentary trusts.

However, the supporting consultation materials indicate that this exemption will be subject to conditions and further clarification, as such it will be important to review the legislative detail and guidance before these measures take effect.

For a more detailed breakdown, see our alert on Proposed testamentary trust rules: Understanding the 30% minimum tax exemption.

What this means for clients

These reforms will impact businesses, investors, and families differently depending on their structure:

• Small business owners will benefit from broader CGT concessions and improved cash flow planning opportunities, particularly where business sale or succession is being considered.
• Startups and founders may gain access to new investment incentives, supporting capital raising and growth.
• Trust vehicles in family groups and private business owners will be subject to higher tax from 2028.
• Estate planning strategies will become more complex, with testamentary trusts remaining attractive but subject to new conditions and integrity measures.

Importantly, while most small businesses will continue to access CGT relief, those operating through discretionary trusts will need to reassess whether their current structures remain fit for purpose.

The impact

Overall, the reforms aim to strike a balance between supporting investment and reducing tax barriers for business, while strengthening integrity around trust taxation.

The shift toward a minimum tax regime represents a move away from flexible income splitting and toward more consistent tax outcomes across different structures. For many clients, this will mean:

• reviewing ownership and operating structures before 2028
• reconsidering succession and estate planning arrangements
• identifying opportunities to restructure, particularly during any available transitional relief period
• modelling future tax positions under the new rules.

How SW can help

SW can support you in navigating these reforms with confidence. Our team can:

• assess the impact of proposed changes on your current structure
• review your tax, succession, and estate planning strategies
• identify restructuring opportunities ahead of the 2028 commencement
• provide practical guidance as further legislation and ATO guidance is released.

If you would like to understand what these changes mean for you or your clients, please reach out to your SW advisor.

Contributors

Julia Lee | Business Development & Marketing Executive

The post Discretion advised on the 30% trust tax, $10m CGT lifeline & startup sweeteners appeared first on SW Accountants & Advisors.