30% Minimum Tax for Discretionary Trusts
Treasury has released draft legislation for a 30% minimum tax on discretionary trusts to be introduced from 1 July 2028.
The draft covers:
- An explanation of how the 30% minimum tax will work.
- Trusts and income that are excluded.
- A new definition of a fixed trust.
- Treatment of tax-exempt entities.
- Roll-over relief for certain trust restructures.
- An additional election in which the beneficiaries are permitted to share fixed percentages of income and capital.
- Treatment of excess franking credits.
Limited roll-over relief from 1 July 2027 for three years, where some trusts can roll assets into a non-discretionary structure. Existing discretionary trusts may be eligible to make an EET election from 1 July 2028.
Where a trust takes the election, the 30% minimum tax will not apply. Where it does not, the election can be reversed (and the higher tax rates may apply).
Referring to franking credits that the trust cannot use, excess franking credits will be refunded to the trustee if a trust has a 30% minimum tax.
The legislation remains in draft form, and the Treasury is consulting stakeholders. There may be further amendments before legislation is introduced to Parliament.
In addition, the Government has proposed to include existing UPEs in Division 7A, which would result in a return to the Bendel decision. However, this has not been confirmed and is still to be clarified.
FBT Treatment of Electric Vehicles
In draft legislation released by Treasury, new changes have been proposed to the current FBT exemption for eligible electric vehicles (EVs). The proposed 25% FBT discount would apply to:
- Eligible EVs over $75,000 from 1 April 2027, up to the LCT threshold.
- All eligible EVs from 1 April 2029, up to the LCT threshold.
EVs with a value at $75,000 or less may continue to receive a 100% FBT exemption if the vehicle commitment is made prior to 1 April 2029. Existing lease arrangements may keep their current FBT treatment, but it is still not clear how the rules will apply where the employer owns the vehicle.
Research and Development tax incentive
Exposure draft legislation has been released by Treasury related to proposed reforms to the research and development tax incentive (R&DTI) from 1 July 2028. The reforms propose to:
- Maximise offsets for eligible core research and development activities and remove the eligibility of supporting research and development activities.
- Minimise the intensity threshold for the non-refundable offset to 1.5%.
- Maximise the turnover threshold to $50 million for the refundable offset.
- Increase the minimum expenditure threshold to $50,000.
- Increase the maximum expenditure threshold to $200 million.
- Limit refundability to firms up to 10 years of age, with up to 15 years extension for eligible firms undertaking research and development activities related to therapeutic goods.
Innovative business CGT concession
Exposure draft legislation has been released by Treasury on the proposed innovative business CGT concession (IBCC) to offer a 50% discount on capital gains from eligible early-stage investments in innovative start-ups. The IBCC would apply to eligible shares released by qualifying innovative businesses, with the draft legislation reducing the minimum holding time to three years and extending the eligibility period to 15 years for all qualifying businesses. The previous proposed lifetime cap has also been removed. Eligible trusts, partnerships, and individuals would have a choice between applying the 50% IBCC discount or the cost-base indexation method and related 30% minimum tax rules. The proposed concession may apply from 1 July 2027, alongside the broader changes to the CGT regime. Submissions on the exposure draft close on 28 September 2026.
Tax incentives for venture capital schemes
To expand tax incentives for venture capital schemes, Treasury has released exposure draft legislation on the 2026-27 Budget measure. From 1 July 2027, the Government proposes to:
- Maximise the asset value thresholds for eligible investee entities to $480 million from $250 million for Venture Capital Limited Partnerships.
- Maximise the asset value thresholds for eligible investee entities to $80 million from $50 million for Early Stage Venture Capital Limited Partnerships.
- Increase the maximum fund size from $200 million to $270 million of an Early Stage Venture Capital Limited Partnership.
- Increase the threshold at which Early Stage Venture Capital Limited Partnership investment returns can be tax-exempt fully to $420 million from $250 million.
Additionally, the draft legislation also proposes to shut down the Eligible Venture Capital Investor program to new applications on 12 May 2026 from 7:30 pm (AEST).
Protecting consumers – Superannuation and Self-Managed Super Funds (SMSFs)
A package of proposed reforms has been announced by the government to strengthen consumer protections in the superannuation and financial systems. The proposed reforms include a range of SMSF measures which may be relevant to clients who want to set up a new SMSF in the future. The SMSF proposals include:
- The ATO’s ability to prevent rollovers to new SMSFs where there are financial abuse, fraud, or other misconduct concerns.
- Mandatory trustee education before the set-up of a new SMSF.
- A requirement for SMSFs to have a uniquely identifiable bank account.
- Measures to enhance the quality of SMSF investment strategies. This may include the need to have a written investment strategy at the time of setting up a new SMSF.
- ATO visibility of financial adviser fees charged to current and existing SMSFs.
- An increase in the SMSF supervisory levy to $295 from $259 per year.
Details of how these proposals may work in practice are limited, and the Government have recommended they will continue to consult with industry stakeholders with a view to introducing legislation.