Hear practical insights on Discretionary Trust changes, the latest Division 7A developments, and proposed Capital Gains Tax and Negative Gearing reforms from SW experts Matt Birrell, Blake Rodgers, Chris Dexter, and Tim Stillwell.

Webinar details

Date

Tuesday October 27, 2026

Location

Online nationally – via Zoom webinar

Time

12.30pm – 1.30pm (AEDT)

11.30am – 12.30am (Brisbane)

9.30am – 10.30am (Perth)

Expert speakers

Matt Birrell
Director
SW

Blake Rodgers 
Director
SW

Chris Dexter
Director
SW

Tim Stillwell
Director
SW

The post SW / ANZ webinar – Keep Calm and Listen to Your Accountant 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.

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.

Introduction

In the 2026–27 Federal Budget, the Government announced a 30% minimum tax on discretionary trusts, with the stated policy objective to limit income splitting and better align the tax on trust income with the rates paid by wage and salary earners.

While we understand the policy goal of maintaining a genuine 30% floor on discretionary trust income, we hold significant concerns that key elements of the measure, as currently framed, are over-inclusive, administratively burdensome, and, in places, penal. Our submission proposes practical, targeted refinements that preserve the 30% floor while avoiding unfair outcomes.

Even if the significant variations to the proposed regime submitted to Treasury by SW are accepted, there would still be significant impacts on longstanding and accepted structures – in particular the inability for family groups to offset (pre-tax) discretionary trust distributions against losses at the beneficiary level, for example, losses in companies and trusts.

What SW has submitted

In response to the limited scope questions on which consultation was sought, a brief outline of the key points submitted by us are as follows:

A statutory definition of ‘discretionary trust’

The measure should not simply capture any trust that fails the existing ‘fixed trust’ test in Schedule 2F of the ITAA 1936. That bar is exacting and would produce a large number of ‘false positives’, drawing in unit trusts and other structures that are, in substance, fixed. SW submits there should be a purpose-built definition targeting trusts with a substantive power to redirect the economic enjoyment of income or capital between beneficiaries, with express carve-outs for managed investment trusts (MITs), attribution managed investment trusts (AMITs), and most unit trusts.

Carve-out for tax-exempt entities

A non-refundable 30% withholding on distributions to income tax-exempt entities (such as charities and ancillary funds) would, in effect, tax the exempt sector and reduce philanthropic funding by up to 30%. We submit that the offset should be refundable for exempt beneficiaries, or that such distributions be carved out entirely.

Remove the double tax on corporate beneficiaries

Denying company beneficiaries a credit for the trustee-level tax produces an effective rate of 60%, and up to 69.7% once distributed to individuals. SW proposes a ‘restricted franking account’ mechanism that delivers a non-refundable offset to the company and quarantines the credit so it can never be refunded to low-rate shareholders. This maintains the 30% floor without double taxation – and largely removes the need for complex rollover relief.

Workable rollover relief & state duty

If the penal treatment of corporate beneficiaries proceeds, rollover relief becomes critical. We warn that, without matching state duty concessions, restructures could trigger duties of up to 6.5%. We submit that relief should not require all assets to be transferred, and that the Commonwealth should secure aligned state duty relief or provide an income tax offset for duty paid.

Collection, lodgement & the Bendel decision

SW recommends aligning trust and individual lodgement dates, making the trustee and beneficiary jointly and severally liable (to avoid widespread deed amendments), refunding excess franking credits to the trustee, and confirms that no further Division 7A changes are needed following the High Court’s decision in Bendel.

Who is impacted

• Private business and family groups operating through discretionary trusts, particularly those with corporate beneficiaries.
• Unit trusts and other structures that are commercially ‘fixed’ but may fall within the current definition by default.
• Charities, ancillary funds, and other income tax-exempt beneficiaries of discretionary trusts.
• Property, investment, and testamentary trust structures, and those weighing restructures ahead of 1 July 2028.

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

Related links

Treasury – Minimum tax on discretionary trusts: Consultation Paper (8 July 2026)

ATO – Tax reform: introducing a minimum tax on discretionary trusts

SW insight – Proposed testamentary trust rules: Understanding the 30% minimum tax exemption

This alert is general in nature and does not constitute advice. The measure is not yet law and remains subject to consultation. Liability limited by a scheme approved under Professional Standards Legislation.

The post Trust in the detail: SW calls for a fairer 30% minimum tax on discretionary trusts appeared first on SW Accountants & Advisors.

Following the Federal Budget announcement, SW and Westpac have partnered to deliver a series of practical sessions designed to help individuals and businesses understand the proposed tax changes and their potential implications.

Before making major decisions based on media commentary, join SW specialists Matt Birrell, John Dorazio, Chris Dexter, Blake Rodgers, and Dale Sloman as they unpack the proposed changes and explain what they may mean for you.

Series program

Session 1 – Discretionary Trust

Gain insight into the proposed changes to the taxation of discretionary trusts, including the introduction of a minimum tax, and what these reforms could mean for business owners, family groups, and succession planning.

Session 2 – Capital Gains Tax (CGT)

Explore the proposed CGT reforms, including changes to the 50% discount and proposed minimum tax measures, and what these changes could mean for investments, business assets and future planning.

Session 3 – Negative Gearing

Understand the proposed changes to negative gearing, including limits on deductible losses for future property investments, and what these reforms could mean for investors, cash flow, and long-term wealth strategies.

Expert speakers

Matt Birrell
Director
SW

Blake Rodgers 
Director
SW

Chris Dexter
Director
SW

Dale Sloman
Associate Director
SW

John Dorazio
Director
SW

The post SW / Westpac | Keep Calm and Listen to Your Accountant appeared first on SW Accountants & Advisors.