Picture a cattle family west of Rockhampton. Three generations, one family trust, a property bought decades ago and a business that has quietly supported parents, children and grandchildren. For thirty years, the trust has done exactly what it was set up to do.
From 1 July 2028, the rules that trust operates under are set to change. The 2026–27 Federal Budget, handed down on 12 May 2026, announced what the Treasurer has called the most ambitious tax reform package in a generation. At its centre is a 30 per cent minimum tax on discretionary trusts. In October 2026, the legislation to implement it was introduced into Parliament.
For many Queensland families, farmers and business owners, this is not an abstract policy debate. It goes to the heart of how they hold assets, run businesses and plan for the next generation. The good news is that there is time to plan — but not time to wait.
Key points
- From 1 July 2028, a 30 per cent minimum tax is proposed on the taxable income of discretionary (family) trusts.
- The Bills were introduced into Parliament on 14 October 2026. They are not yet law and may change.
- Fixed trusts, charitable trusts, special disability trusts, super funds, deceased estates and genuine testamentary trusts are not intended to be caught.
- Primary production income is expected to be carved out, but non-farm income such as renewable energy leases or contracting may still be caught.
- Federal rollover relief does not, of itself, relieve Queensland transfer duty. Hold off on irreversible steps until the law is settled.
What has actually been proposed
Under current law, a discretionary trust can distribute income to beneficiaries, who are then taxed at their own marginal rates. That flexibility — often called income splitting — is the main tax advantage of a family trust.
The Budget proposes that, from 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts (Treasury, consultation paper release, July 2026). The Government's stated aim is to align trust tax outcomes more closely with what wage earners pay. The Treasurer has said the 30 per cent rate matches the marginal rate for workers earning between $45,000 and $135,000 (Accountants Daily, October 2026).
A few design features matter in practice:
- Franking credits — trustees receiving franked dividends are expected to use those credits towards the trustee's minimum tax (Macquarie technical roundup, June 2026).
- Bucket companies — the measure is designed so the minimum tax cannot be sidestepped by cycling income through a corporate beneficiary (Nexia Australia).
- Revenue — the measure is estimated to raise $4.5 billion over five years (SmartCompany).
The process has moved quickly. Treasury released a consultation paper in July, exposure draft legislation in September, and on 14 October 2026 the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and the Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026 were introduced into Parliament (Treasurer's media release, 14 October 2026). These Bills are not yet law, and their final form may change as they move through Parliament.
The main Bill has been referred to the Senate Economics Legislation Committee, which is due to report on 13 November 2026 (The Tax Institute submission).
Which trusts are outside the net
Not every trust is caught. Based on the Government's announcements, the minimum tax is not intended to apply to:
- fixed trusts (and the Bill introduces a new statutory definition of a fixed trust)
- charitable trusts
- special disability trusts
- superannuation funds
- deceased estates and genuine testamentary trusts
(The Lawyer Magazine; SBS News)
The new fixed trust definition deserves close attention. Many Queensland unit trusts used for property development and joint ventures have historically been treated as "fixed" for some purposes but not others. Whether a particular trust deed satisfies the new definition will depend on its precise terms — and is something we expect to see considerable activity on over the next eighteen months.
Treasury has also signalled that around 40 per cent of the roughly 350,000 small businesses operating through discretionary trusts are not expected to pay any additional tax or need to restructure (SmartCompany). That is a useful reminder: the impact will vary sharply from one family to the next.
The bigger picture: CGT and negative gearing
The trust measure does not stand alone. Two other Budget reforms land a year earlier and interact directly with how trusts hold assets.
Capital gains tax. From 1 July 2027, the 50 per cent CGT discount is proposed to be replaced for gains arising after that date, with indexation and a 30 per cent minimum tax applying instead. Transitional rules are designed so the change applies only to gains arising on or after that date (Nexia Australia Budget Insights). For trusts holding long-term assets — farmland, commercial property, shares — the timing and valuation of assets at 1 July 2027 could become important.
Negative gearing. From the same date, negative gearing is proposed to be limited to new residential properties (CA ANZ). Families holding residential investment property through trusts will want to understand how this interacts with existing holdings.
Chartered Accountants ANZ has observed that 1 July 2027 and 1 July 2028 are now the key dates, and that some measures will begin after the next federal election, which may make them contested (CA ANZ). Planning needs to account for that uncertainty, rather than ignore it.
What it means for family businesses and agribusiness
The discretionary trust is the backbone of private enterprise in regional Queensland. Grazing and cropping operations, trade businesses, professional practices and family property portfolios across Central Queensland commonly sit in trusts, often with a bucket company alongside.
The practical consequences are likely to fall into three groups:
- Lower-income beneficiaries. Distributions to family members on lower marginal rates — adult children at university, retired parents — currently produce the largest tax saving. Under a 30 per cent floor, much of that saving narrows.
- Farm income and mixed-income groups. Primary production income is expected to be carved out of the minimum tax (Stock Journal). But many rural families also earn non-farm income — such as renewable energy leases, contracting or land access payments — or hold land in a separate trust, and that income may still be caught (Stock Journal). Restructuring is not a simple fix either: farm management deposits are only available to individuals, including trust beneficiaries, not companies (ATO), so moving a farming operation into a company could cost access to the scheme.
- Compliance and cost. Accountancy bodies have raised concerns about complexity and restructuring costs. CPA Australia, for example, has described a blanket rate at the higher end of the scale as risking a punitive regime (Accountants Daily, May 2026).
Even before 2028, trust deeds, resolutions and distribution records are likely to face closer scrutiny. Getting the paperwork right is no longer optional housekeeping.
Wills, estates and testamentary trusts
The reforms have stirred a public debate about whether trust changes amount to a "death tax". The Opposition has argued they do; the Treasurer has rejected that claim, stating that deceased estates, fixed trusts and existing testamentary discretionary trusts remain exempt (SBS News). The Government has also said it will exempt income from discretionary testamentary trusts established for genuine testamentary purposes (Treasury, July 2026).
That is reassuring, but the qualifier "genuine" matters. A testamentary trust in a will remains one of the most effective tools for protecting an inheritance and providing for minors or vulnerable beneficiaries. What will count as genuine — and how a family trust that passes control on death will be treated — is still being worked through (Firstlinks).
For Queensland families, this is a good moment to look at the whole picture together: the will, any testamentary trust provisions, the family trust deed and its succession clauses (appointor and trustee control), and enduring powers of attorney. These documents are often prepared years apart. The reforms are a reason to check they still work as one plan.
To restructure or not?
The Government has built in a pathway for those who decide their trust no longer suits them. A time-limited, three-year restructure rollover is proposed to help move assets out of discretionary trusts into entities that are not discretionary trusts (ATO).
The October Bills go further. They include an option for a trust to elect to make distributions to pre-nominated beneficiaries under an upfront nomination. The Treasurer has said this would not require a restructure or restrict the trust's discretionary powers, and is not expected to trigger state or territory stamp duty (The Lawyer Magazine).
Stamp duty is the critical Queensland issue. Federal rollover relief does not, of itself, relieve transfer duty under the Duties Act 2001 (Qld). Queensland Treasury has not ruled out duty on trusts that make the new election, and has said trusts using the federal rollover could still be subject to duty depending on individual circumstances. Moving farmland or commercial property out of a trust could attract significant duty, and land tax treatment may also change depending on the new owner. Existing Queensland duty exemptions for some trust and small business restructures may help in particular cases, but each needs to be checked against the specific transaction.
Restructuring is not automatically the right answer. A company offers a flat rate but loses the CGT flexibility trusts have traditionally enjoyed; a fixed trust offers certainty but less flexibility. The right choice depends on the family, the assets and the long-term plan.
What to do now — and what to watch for in May 2027
With the Bills before Parliament and the next Federal Budget expected in May 2027, the details may still shift. That is a reason to prepare, not to delay. Sensible steps include:
- Locate and review your trust deed. Check who the trustee and appointor are, the beneficiary classes, and the vesting date. Older deeds may need updating before any election or restructure is possible.
- Model the numbers with your accountant. The impact depends entirely on who currently receives distributions and at what rates.
- Value key assets. With CGT changes proposed from 1 July 2027, knowing what assets are worth at that date may matter.
- Review your estate plan alongside your trust. Wills, testamentary trust provisions and control succession should line up.
- Hold off on irreversible steps. Don't transfer property or wind up a trust until the legislation is settled and the duty consequences are clear.
In the lead-up to the 2027–28 Budget, watch for amendments as the Bills pass through Parliament, any Queensland Government response on stamp duty, and further detail on the fixed trust definition and testamentary trust exemption.
Frequently asked questions
It is proposed to apply from 1 July 2028. The legislation was introduced into Parliament on 14 October 2026, is not yet law, and its final form may change.
Based on the Government's announcements, it is not intended to apply to fixed trusts, charitable trusts, special disability trusts, superannuation funds, deceased estates and genuine testamentary trusts. The Bill introduces a new statutory definition of a fixed trust, so whether a particular trust qualifies will depend on its deed.
Primary production income is expected to be carved out. However, non-farm income such as renewable energy leases, contracting or land access payments may still be caught, as may land held in a separate trust.
The Government has said it will exempt income from discretionary testamentary trusts established for genuine testamentary purposes. What will count as genuine, and how a family trust that passes control on death will be treated, is still being worked through.
Not automatically. A three-year restructure rollover is proposed, but federal relief does not, of itself, relieve Queensland transfer duty. Review your trust deed, model the numbers with your accountant, and avoid irreversible steps until the legislation is settled and the duty consequences are clear.
How we can help
Family trusts have been part of how Central Queensland families and businesses have built and protected wealth for generations. Since 1961, our lawyers have helped clients set up, manage and pass on those structures — and we have seen plenty of tax changes come and go.
These reforms are among the most significant in decades, but they are manageable with early, careful advice. Our wills and estates, business and commercial, and property teams work alongside your accountant to review your trust deed, map out your options and plan any changes so that duty, tax and succession are considered together. Whether you're in Rockhampton, on the Capricorn Coast or in Brisbane, we're here to help you plan with confidence.
To arrange a review of your trust or estate plan, contact our team today.
This article provides general information about proposed changes as at 4 November 2026. The legislation is not yet law and may change. It is not legal or tax advice, and you should seek advice specific to your circumstances before acting.
Sources
- Treasurer — Tax reform for a fairer tax system (14 Oct 2026)
- Treasurer — Consultation on discretionary trusts reform implementation (8 Jul 2026)
- ATO — Tax reform: introducing a minimum tax on discretionary trusts
- ATO — Farm management deposits scheme
- Chartered Accountants ANZ — Federal Budget 2026–27 overview
- Nexia Australia — 2026 Federal Budget Insights
- Macquarie — Monthly technical roundup, June 2026
- Accountants Daily — Federal budget confirms major tax changes to trusts, CGT
- Accountants Daily — Government introduces next tranche of trust tax bill
- The Lawyer Magazine — Legislation sets minimum tax on discretionary trusts
- The Tax Institute — Senate committee submission (29 Oct 2026)
- SBS News — The death tax debate
- Firstlinks — Testamentary trusts post-budget
- SmartCompany — Budget 2026: new 30% minimum tax for discretionary trusts
- Stock Journal — Federal government trust tax puts farm savings at risk
- Stock Journal — Trust tax uncertainty for diversified farm incomes
This article is general information about the law as it applies in Queensland, current at the date of publication. It is not legal advice and does not take your circumstances into account. The law changes. Speak to one of our lawyers before acting.
Filed under Wills and Estates, Business and Commercial, Agribusiness
