Newly introduced legislation sets minimum tax on discretionary trusts

• Over 95 percent of individuals are not trust income recipients 
• The reforms will not impact more than 90 percent of small businesses in any given year 
• The number of trusts has more than doubled over the past two decades 

Exemptions from minimum tax on discretionary trusts

Chalmers clarified that the following are exempt from the new minimum tax on discretionary trusts: 

• fixed trusts 
• charitable trusts 
• special disability trusts 
• superannuation funds 
• primary production income 
• certain income relating to vulnerable minors 
• deceased individuals’ estates 
• discretionary trusts created for genuine testamentary purposes 
• distributions from trusts to registered charities and deductible gift recipients (DGRs) 
• distributions to sporting clubs and other income tax‑exempt entities (up to a reasonable limit) 

Options to remove or restrict restructuring costs

Starting on 1 July 2027, small businesses and other discretionary trust users can avail of rollover relief if they are interested in restructuring or can make an election for tax purposes to access a minimum tax exemption while they continue making distributions to pre‑nominated beneficiaries in accordance with an upfront nomination. 

“That would not require a restructure or restrict a trust’s discretionary powers and is not expected to incur state and territory stamp duties,” Chalmers said. 

Other tax system changes

According to Chalmers, with the recently introduced bills, Australia’s government also aims to: 

• Implement the next tranche of legislation for the reforms to negative gearing and capital gains tax (CGT) 
• Clarify the CGT for various trust structures and in other complex and specific circumstances 
• Offer transitional relief for excess contributions in Payday Super’s first year 
• Support new housing supply 
• Preserve tax arrangements for affordable and public housing and other housing types 
• Define a new residential dwelling 
• Identify exemptions from the limits on negative gearing for affordable and public housing, specialist disability accommodation, operators of retirement villages and residential aged care, and build‑to‑rent developments 

Goals of new tax legislation

Chalmers noted that the reforms seek to: 

• Implement ambitious tax reforms 
• Make the tax system fairer and more sustainable for workers, businesses, and future generations 
• Fund income tax reductions for Australian workers 

“Since the Budget, we have already passed significant reforms to cut taxes for 13 million workers, support more Australians to get into the housing market, and we are delivering $3.8 billion in lower taxes for businesses and start ups,” he said. 

Chalmers expressed gratitude to those who provided the stakeholder consultation input that informed the reforms. 

“We will continue to consult with stakeholders on further tranches of legislation and legislative instruments as we finalise the implementation of our tax reform package,” he said in the media release. 

Previous legislative updates

Here are some other recent news stories involving the Australian government’s legislative updates. 

On 2 April 2026, Attorney-General Michelle Rowland highlighted the introduction of the Secrecy Provisions Amendment (Repealing Offences) Bill 2026, intending to repeal or remove criminal liability for more than 300 secrecy provisions. 

On 26 March 2026, the federal government announced the passage of the Treasury Laws Amendment (Doubling Penalties for ACCC Enforcement) Bill 2026, doubling penalties for false or misleading conduct and cartel behaviour across the economy to up to $100m for each offence. 

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