Before ParliamentMoney & Tax Introduced in the House of Representatives, 14 Oct 2026

Family trusts would pay at least 30% tax

Family trusts would face a 30 per cent tax floor, with ways out for those who change how they run. The bill also fixes the new rules on rental homes and on profits from sales, and protects some workers from a super tax bill.

Official name: Treasury Laws Amendment (Tax Reform No. 3) Bill 2026

Who it affects

• People who run a business or hold savings through a family trust: The trust would pay at least 30 per cent tax on most of its income from 1 July 2028.
• People who get money paid out from a family trust: You would get a tax credit to match the tax the trust paid on your share.
• Companies that get money from a family trust: They would not get the tax credit.
• Farmers, children with a disability and charities: Farm income and some income for these groups would be left out of the new tax.
• People who invest in new homes to rent out: You could still use rental losses to cut the tax on your wages.
• Workers with high super payments in 2026-27: Late super for April to June 2026 would not push you over the yearly limit.

Trusts split income to cut tax

A trust is a way to hold money or a business for other people. The person or company in charge is called the trustee. The people who can get money from the trust are called beneficiaries.

In a family trust, the trustee picks who gets paid each year and how much. The law calls this a discretionary trust. The trust itself usually pays no tax. Each person pays tax on their share at their own rate.

The government says this lets trusts pay money to family members on low tax rates. A trust can also pay a company, which pays a flat rate. The government says this lets some people pay less tax than a worker on the same income.

Australia had more than 1 million trusts in 2022-23. About 840,000 were family trusts. They held about $1.1 trillion and paid out $142.4 billion that year.

The government's notes say the richest 10 per cent of households hold over 90 per cent of private trust wealth. The Treasurer, Jim Chalmers, announced a fix in the 2026-27 Budget. This bill is the main part of it. A short partner bill sets the tax rate.

The bill also does three more jobs. It fixes the new rules on profits from sales. It sets which rental homes keep a tax break. It also helps workers caught out by a change to how super is paid.

A 30% floor on trust income

From 1 July 2028, the trustee of a family trust would pay at least 30 per cent tax on the trust's income. The trustee pays because the trustee decides who gets the money.

If the trustee already pays some tax on that income, the new tax only tops it up to 30 per cent. If the trustee already pays 30 per cent or more, nothing extra is due.

The government's notes give an example. A trust earns $200,000 and pays it all to family members. The trustee, Noah, would pay $60,000. That is 30 per cent.

In another example, a trust earns $30,000 and pays it to no one. The trustee already owes $4,200. The new tax adds a top-up of $4,800. The total is $9,000, or 30 per cent.

Trusts and income left out

Some trusts are left out. These include trusts where each person has a fixed share, such as most big investment funds. Super funds and charity trusts are left out too.

Trusts for people with a severe disability are also left out. So are the estates of people who have died. Trusts that hold shares for staff are left out. So are funds that hold money for workers who lose their jobs. A minister could add more types to the list.

The bill also gives a clearer meaning of a trust with fixed shares. The aim is to keep normal business trusts out of the new tax.

Some kinds of income are left out as well. Farm income is left out. So is income from a genuine trust set up in a will.

Money for a child under 18 is left out if the child has a disability, gets certain payments or has lost both parents. Money paid to a charity is left out too, if some rules are met.

Money put into a will trust after 7.30 pm on 12 May 2026, Budget night, would still be taxed. This stops people moving assets into a will trust to dodge the tax.

A tax credit for those paid

People who get a share of the trust's income would still pay tax on it at their own rate. To stop them paying twice, they would get a tax credit. It equals 30 per cent of their share.

The credit can cut your tax to zero. But you cannot get any of it back as cash, and you cannot keep it for next year.

The government's notes use the Echidna Trust. It earns $12,000. The trustee pays $3,600 in the new tax.

Charlotte gets $6,000 from the trust and earns $140,000 from other work. Her tax bill is $34,822. Her credit of $1,800 cuts it to $33,022. So she pays the same as before.

James gets $2,400 and earns $19,000 elsewhere. His tax bill is only $308. His credit of $720 wipes it out. The other $412 of his credit is lost. So the trust's income is taxed at 30 per cent, even though James is on a low rate.

A company that gets money from the trust would get no credit at all. The government says trusts pay companies to use the lower company rate and to put off tax.

Moving assets out of a trust

Moving things out of a trust can trigger a tax bill. Say a trust owns shares that have gone up in value. Handing them to a company can count as a sale.

Part 2 of the bill would let trusts move all their assets into one new or existing structure with no income tax bill. That could be a company or a trust with fixed shares. The window runs from 1 July 2027 to 30 June 2030.

The same people must own the new structure as could benefit from the old trust. Each owner's share must be fixed. The trustee and the new owner must both choose to use the rule.

The trust must move everything by 30 June 2030. If it keeps a big asset, such as a block of land, the relief is lost for all of it. The Tax Office could then send new tax bills.

A few things can stay behind. These include farm assets, money to pay the trust's debts and costs of closing it, and small items that cost $1,000 or less.

A trust that moves everything by 30 June 2028 would never pay the new tax. The rule does not force any trust to change. It only covers income tax. State taxes such as stamp duty could still apply.

Fixed shares as a way out

Part 3 of the bill gives trusts a cheaper choice. A trust that exists on 1 July 2028 could make a one-off choice in the 2028-29 tax year.

The trustee would list the people who get the trust's earnings and each person's share. The shares must add up to 100 per cent. The trustee must then pay out those same shares every year. If so, the 30 per cent tax does not apply.

Say a trust lists two sisters at 50 per cent each. As long as the trustee pays them half each every year, the new tax stays away.

The trustee can change the list only if a person dies or a couple on the list breaks up. A trust can also set aside a share for charities, and the charities can change each year.

If the trustee ever pays different shares, the deal ends. That year, the trustee pays the top tax rate plus the Medicare levy on all the trust's income. After that, the 30 per cent tax applies every year.

A trust can use this choice or move its assets out. It cannot do both. Groups told the government that moving out could cost up to $50,000 in fees and duty. This choice is meant to avoid those costs.

Fixes to sale profit rules

When you sell something like shares or a rental home for more than you paid, the profit is called a capital gain. Earlier this year, Parliament passed big changes to how these profits are taxed. That law got final approval on 26 June 2026.

From 1 July 2027, the old 50 per cent discount on these profits is replaced. You can lift what you paid in line with prices over time, so only the real gain is taxed. Profits also face a tax rate of at least 30 per cent.

Part 4 of this bill fixes gaps in that law. It applies the new rules to large investment funds that many people put money into together.

It lets trusts keep the 50 per cent discount for new homes and affordable housing. It also protects super funds that invest through trusts from a rule about losses.

Some profits would not face the 30 per cent minimum on sale profits. These are profits of genuine will trusts, estates of people who have died, disability trusts and children.

Some people live here for only part of the time they own something. They would get the discount or price rise only for the days they lived here. There are other smaller fixes to make the rules work as planned.

Rental homes that keep the break

Negative gearing is when your rental home costs more than it earns. Many owners use that loss to cut the tax on their wages.

The same law from June 2026 limits this from 1 July 2027. For homes bought after 7.30 pm on 12 May 2026, rental losses can only cut tax on other rental income. New homes were to keep the old break. Part 5 of this bill sets out what counts as new.

A home is new for you if you build it on empty land. It is new if you add more homes to land you own. It is new if you turn another kind of building into homes. It is also new if you buy it within 24 months of when it was first approved to live in.

The home must be in Australia and legally fit to live in. It must also be able to be sold on its own.

Some other homes would keep the break too. These include special housing for people under the disability support scheme, affordable housing and homes lent to government for public housing. Homes in big build-to-rent projects, retirement villages and aged care homes are included.

Places like hotels, hostels and some student housing would not count as homes at all, so the limit would not touch them.

Extra super from payday change

Your boss must pay part of your wages into your super. Until June 2026, bosses paid it every three months. Payments for April to June 2026 were due by 28 July 2026.

From 1 July 2026, bosses must pay super within seven working days of each payday. This is called payday super.

Super is counted in the year it is paid. So some workers will get the April to June 2026 payment and a full year of payday super, all in 2026-27.

There is a limit on how much super can get the low tax rate each year. For 2026-27 it is $32,500. Going over it can mean extra tax.

Part 6 of the bill deals with this. The late April to June 2026 payment would be ignored, as far as needed to keep you under the limit. It only covers super your boss had to pay. It does not cover extra super you chose to add from your pay. The Tax Office should work this out for you with no form to fill in.

Waiting in the House

The Treasurer brought the bill into the House of Representatives on 14 October 2026. The House began debate on its main idea the same day.

The House must still debate it and vote. Then the Senate must pass it. The Governor-General, the King's representative, must then sign it into law.

Parts 1 to 3 start once the partner bill that sets the rate starts. That will be on the first 1 January, 1 April, 1 July or 1 October after it becomes law. The 30 per cent trust tax would apply from 1 July 2028. The window to move assets runs from 1 July 2027 to 30 June 2030.

Parts 4 to 6 start on the first 1 January, 1 April, 1 July or 1 October after this bill becomes law. The sale profit fixes apply from 1 July 2027. The super change applies to the 2026-27 year.

The rules on how trustees tell people about the tax, and how it is collected, will come in a later bill.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

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