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Australia: Tax reform bills covering trusts, R&D, and investment pass lower house of Parliament

Bills would introduce a minimum tax regime for discretionary trusts and measures supporting innovation, R&D, and investment.

October 30, 2026

The federal government’s third and fourth tranches of tax reform legislation passed the lower house of Parliament (House of Representatives) on October 29, 2026.

The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026 contain the government’s proposed minimum tax regime for discretionary trusts.

The measures would:

  • Establish a minimum tax on the net income of discretionary trusts from July 1, 2028
  • Provide three years of roll-over relief from July 1, 2027, for small businesses and others seeking to restructure from affected discretionary trusts into another entity, such as a company or fixed trust
  • Introduce an elective regime for certain discretionary trusts otherwise subject to the 30% minimum tax

The legislation provides exemptions or exclusions for a range of entities and circumstances, including fixed trusts, charitable trusts, special disability trusts, superannuation funds, deceased estates, and certain testamentary trusts.

The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 also contains further changes associated with the government’s capital gains tax (CGT) reforms, negative gearing measures, and transitional relief associated with the move to Payday Superannuation.

Separately, the Treasury Laws Amendment (Tax Reform No. 4) Bill 2026 contains a package of measures aimed at encouraging innovation, R&D, and investment.

Key measures include:

  • Establishing the innovative business CGT concession, which would provide eligible investors in innovative start-ups with access to a 50% CGT discount
  • Changes to simplify and refine the R&D tax incentive
  • Updates to venture capital tax incentives to support investment in early-stage and high-growth businesses
  • Measures enabling taxpayers to choose monthly pay as you go (PAYG) installments, with the Commissioner able to require monthly installments for certain noncompliant entities
  • Phased changes to the fringe benefits tax (FBT) treatment of eligible electric cars

All three bills passed their third reading in the House of Representatives on October 29, 2026, and now move to the Senate for consideration.

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