Proposed Minimum Tax on Discretionary Trusts
The Government plans to introduce a 30% minimum tax on discretionary trusts to improve the tax system and fund new worker tax cuts. From 1 July 2028, trustees of discretionary trusts will have to pay a minimum tax of 30% on the trust’s taxable income. Non-corporate beneficiaries will receive non-refundable credits for the tax paid by the trustee.
Trusts not affected:
The minimum tax will not apply to:
- Fixed and widely held trusts (including fixed testamentary trusts)
- Complying superannuation funds
- Special disability trusts
- Deceased estates
- Charitable trusts
Income excluded from the minimum tax:
- Primary production income
- Certain income for vulnerable minors
- Amounts subject to non-resident withholding tax
- Income from assets of discretionary testamentary trusts existing at the announcement
Roll-Over Relief to Restructure
From 1 July 2027, an expanded roll-over relief will be available for 3 years to help small businesses and others restructure out of discretionary trusts into another entity, such as a fixed trust or a company.