For decades, the family trust has been one of the most popular wealth-planning tools in Australia. It has helped families with succession, asset protection and distributing income between different beneficiaries. But the 2026–27 Federal Budget has turned the spotlight on discretionary trusts. From 1 July 2028, the Government will introduce a 30 per cent minimum tax on discretionary trusts. The tax will be paid by the trustee, and beneficiaries will generally receive non-refundable credits for tax paid by the trust.
The big target is income splitting. Under the current system, trustees can distribute income to beneficiaries who may be on lower tax rates. The Budget states that this flexibility is not available to ordinary wage earners, and the reform is designed to better align tax paid on trust income with tax paid by workers. In other words, the family trust is not being abolished, but the old “spread it around and lower the bill” strategy is getting a very serious haircut.
This is a sharper approach than the 2016–17 Budget period, when the tax conversation was more broadly focused on integrity measures, ATO compliance and high-wealth tax avoidance taskforce activity. At that time, the Government funded the ATO to pursue multinationals, large public and private groups, and high-wealth individuals. In 2026, the Budget goes further by changing the tax mechanics of discretionary trusts themselves.
| Trust issue | What changes | Why it matters for property families |
| Minimum tax | Trustees will pay a 30 per cent minimum tax on taxable income of discretionary trusts | Lower-rate beneficiary strategies may become less effective |
| Beneficiary credits | Non-corporate beneficiaries receive non-refundable credits for tax paid by the trustee | Credits may help, but they do not always create a refund |
| Exclusions | Fixed trusts, widely held trusts, super funds, special disability trusts, deceased estates and charitable trusts are excluded | Some families may review whether their current structure still suits them |
| Rollover relief | Three years of relief from 1 July 2027 for restructuring into another entity type | Families may have a limited window to restructure without triggering certain income tax consequences |
| Property titles | Trust-held homes, commercial property and investment assets may need review | Moving property between entities can still create stamp duty and legal consequences |
That is when it becomes more than a tax headline for families who own property. A trust could hold a family business premises, an investment property in Blacktown, a commercial unit in Norwest, a development site in Box Hill or a long-held asset in Castle Hill. Changing the structure may offer tax advantages on paper, but property law has its own traps for the unwary. Transfer duty, mortgage consent, land tax, lender requirements, contract timing and title details all need to be checked before anyone starts shifting assets around.
The Budget contains a pressure valve. Expanded rollover relief will be available for three years from 1 July 2027 to help small businesses and others restructure out of discretionary trusts into structures such as companies or fixed trusts. However, the Government has also indicated that it will consult on key details, including the collection mechanism, excess franking credits and the design of rollover relief. That means families should prepare early, but avoid rushing into half-planned restructures.
Flash Conveyancing Advice
Before changing a trust structure, get your tax, legal and conveyancing advisers around the same table. A restructure that saves tax but triggers duty, finance problems or title issues can become an expensive distraction. Before you move, check the trust deed, ownership records, mortgages and future property plans.
Smart families do not panic when the Budget changes old wealth structures; they check the foundations. Julian & Renee at Flash Conveyancing assist NSW property owners with careful contract reviews, title checks, transfers and settlements across Blacktown, Hawkesbury, Blue Mountains, The Hills, Hornsby, Parramatta and surrounding councils. Flash Conveyancing brings local knowledge, clear communication and a personalised touch to every property move, whether you are in Acacia Gardens, Quakers Hill, Schofields, Marsden Park, Bella Vista, Castle Hill, Kellyville, Rouse Hill, Box Hill, Norwest, The Ponds, Seven Hills, Riverstone, Windsor or Winston Hills.