“Legislation tabled in parliament today for the minimum tax on discretionary trusts fails to address genuine industry concerns over implementation, and will punish businesses who attempt to comply with new trust tax rules,” said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.
“The original sin of these proposed reforms is the costs they impose on business: comprising both the legal fees and state transfer duties which arise when restructuring a trust.
“Businesses who are compliant with tax rules should not face hundreds of thousands in additional costs simply to maintain their current tax treatment.
“While the Commonwealth is extending roll-over relief and a simpler ‘election’ method for fixing trust distributions, there is still no clarity on whether state levy duties will apply in either of these situations.
“The non-tax administrative costs of the reform are also staggering: by Treasury’s own estimates, these are expected to be $1.4 billion over the next 10 years.
“The legislation also fails to address several technical deficiencies we identified during consultations, including for family change provisions and continuity requirements for rollovers. A perverse outcome identified during consultations – that a trust election can be varied in circumstance of death or divorce, but not for the birth of a child – has not been addressed.
“These are major deficiencies with the legislation as it now stands. The bill before Parliament either wilfully or ignorantly would lead to significant distress for small business operators who want to act appropriately to changing family circumstances. We would expect the parliament would move to resolve these clear omissions when it considers the legislation.
“Australian Industry Group has separately engaged with State Treasurers to seek solutions which avoid the imposition of state transfer duties on complying businesses. We welcome their ongoing engagement, and are hopeful that fair and sensible solutions may soon be reached.
“Treasury notes the Economic Reform Roundtable of August 2025 raised the need to improve intergenerational equity in the tax system. However, changes to trusts taxation were not discussed nor agreed at the Roundtable. Nor did the Roundtable endorse an approach to tax reform which arbitrarily punishes businesses acting in good faith. This is simply not how good tax reform should be delivered,” Mr Willox said.
