Lower House Passes 30% Tax on Discretionary Trusts
The plan would apply a baseline 30% tax to discretionary trusts from 1 July 2028, affecting some 350,000 small and family businesses.
Updated on Nov. 2, 2026 in Financial Planning
Live Poll
Do you trust government estimates of what small businesses will pay for new tax changes?
Australia's Lower House has passed a plan imposing a 30% baseline tax on discretionary trusts from 1 July 2028. The bill now heads to the Senate, where an economics committee is conducting an inquiry into the trust tax reforms.
Why it matters
The changes would touch some 350,000 small and family businesses that operate through a trust, many of which will need professional advice to restructure before the rules take effect. Estimates of the cost of that advice and the one-off compliance burden vary widely between government and industry.
Government modelling puts the one-off cost of the reforms at $780 million to $1.1 billion, against CPA Australia's warning that the compliance bill could reach $2.8 billion. The Senate inquiry's findings, due 13 November, have not yet been released.
The players
CPA Australia
CPA Australia is a professional accounting body that has warned the one-off compliance cost of the trust tax changes could reach $2.8 billion.
Natalie Lennon
Natalie Lennon is a tax professional who said most accountants charge around $250 to $450 per hour for advisory services.
The details
The bill applies a 30% baseline tax to discretionary trusts, with the government assuming trusts will need about 120 hours of advice to restructure. Tax agents dispute the government's default rate of $91.54 per hour, noting most accountants charge between $250 and $450 per hour for advisory work.
Timeline
1 July 2028: The 30% baseline tax on discretionary trusts takes effect.
13 November 2026: The Senate economics committee is scheduled to table its trust reform inquiry report.
Market Dynamics
The trust tax reform is the latest step in Australia's long-running debate over how discretionary trusts are taxed, and the Senate economics committee inquiry will determine whether the bill passes in its current form. Its report due on 13 November will set the terms for the remaining legislative process.
Families and small business owners using discretionary trusts may need to seek advice on restructuring before 1 July 2028, and the cost could range widely depending on the adviser's hourly rate. Estimates of $11,000 to $42,000 per business show how much the choice of adviser can affect the final bill.
The takeaway
Trust owners should review whether their structure will be affected before the 2028 start date and budget for professional advice early, since costs vary significantly by adviser. Waiting until the reform is in force may limit options and increase expenses.
What happens next
The Senate economics committee is due to table its trust reform inquiry report by 13 November 2026, and the bill's fate in the Senate will follow.
Further reading
Explore more on Financial Planning to understand how trust structures affect household and business finances.
Source note: This article includes information reported by SmartCompany.
Live Poll
Do you trust government estimates of what small businesses will pay for new tax changes?
