Australia: Draft legislation for discretionary trust minimum tax and related measures
Comments on the draft legislation are due by September 18, 2026.
The Australian Government has released for consultation a package of draft legislation to implement its 2026-2027 budget proposal to introduce a minimum tax on discretionary trusts, together with transitional relief and an elective regime for certain trusts.
The consultation package includes:
- Treasury Laws Amendment Bill 2026: Minimum Tax on Discretionary Trusts
- Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026
- Treasury Laws Amendment Bill 2026: Minimum Tax on Discretionary Trusts – Roll-over Relief
- Treasury Laws Amendment Bill 2026: Minimum Tax on Discretionary Trusts – Electable Regime
Minimum tax proposal
The draft legislation would introduce a 30% minimum tax on the net income of discretionary trusts for income years beginning on or after July 1, 2028.
According to accompanying explanatory materials, the proposed minimum tax would not apply to certain entities and arrangements, including fixed trusts, widely held trusts, attribution managed investment trusts, complying superannuation entities, charitable trusts, and certain categories of income.
Transitional relief
The proposed roll-over relief measure would provide a three-year transitional period beginning July 1, 2027. The relief is intended to facilitate restructures by small businesses and other taxpayers that choose to move from discretionary trust arrangements within the scope of the minimum tax to alternative structures, such as companies or fixed trusts.
Electable regime
The draft legislation also includes an elective regime under which eligible discretionary trusts could nominate beneficiaries that the trustee intends to make presently entitled to trust income and capital for each income year in which the election remains in force.
Consultation
Treasury is seeking stakeholder feedback on several aspects of the proposed regime, including:
- The operation of the minimum tax
- Excluded trusts and categories of income
- The definition of a fixed trust
- Treatment of income tax-exempt entities
- Roll-over relief provisions
- The proposed elective exclusion regime
- Treatment of excess franking credits
Comments on the draft legislation are due by September 18, 2026.