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

Family trust income would face a 30% tax floor

This short bill sets the rate for a new tax on family trusts. It works with a bigger bill that says which trusts pay and how. Together they would bring in about $4.3 billion by 2029-30.

Official name: Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026

Who it affects

• People in charge of family trusts: You would pay tax of at least 30 per cent on most of the trust's income from 1 July 2028.
• People who get money from a family trust: You would get a tax credit for the tax paid on your share, under the partner bill.
• Companies that get money from a family trust: They would get no tax credit, under the partner bill.
• Farmers, charities and some children: Farm income and some income paid to charities and children would be left out of the new tax.

Trusts send income to low earners

A trust is a way to hold money or a business for other people. The person or company in charge is the trustee. The people who can get money from it 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 send income to family members on low rates. It says some people end up paying less tax than workers on the same income.

Australia had about 840,000 family trusts in 2022-23. The government's notes say the richest 10 per cent of households hold over 90 per cent of private trust wealth.

In the 2026-27 Budget, the Treasurer, Jim Chalmers, said family trusts would pay at least 30 per cent tax from 1 July 2028. Two bills put this in place. This is the short one. It sets the tax rate.

How it links to the main bill

The main bill is called the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026. It says which trusts must pay, and on what income.

This bill changes another law, the Income Tax Rates Act 1986. That law lists the rates of income tax. This bill adds a new section to it that sets the rate of the trust tax.

The two bills are tied together. The trust tax parts of the main bill only start right after this bill starts. The government's notes say this makes sure those rules never start if the tax itself is not set.

How the rate is worked out

The bill sets the rate so that the trustee pays at least 30 per cent on the trust's income. It looks at what tax the trustee already pays on that income.

If the trustee pays no tax on it, the rate is 30 per cent. If the trustee pays some tax but less than 30 per cent, the rate is the gap. If the trustee already pays 30 per cent or more, the rate is zero.

The government's notes give an example. The Numbat Trust earns $30,000 and pays it to no one. Its trustee already owes $4,200 under the normal rules. That is 14 per cent.

So the new rate is the gap of 16 per cent. That adds a top-up of $4,800. The total tax is $9,000, which is 30 per cent of $30,000.

In a second example, a trust pays all $200,000 of its income to family members. The trustee pays no other tax on it. So the rate is the full 30 per cent, or $60,000.

The bill also changes one more section of the rates law. This makes sure the right rate applies when some foreign companies get money from the trust.

What the main bill does

The main bill says only family trusts pay. Trusts where each person has a fixed share are left out. So are super funds, charity trusts, trusts for people with a severe disability and the estates of people who have died.

Some income is left out too. Farm income and income from genuine trusts set up in a will are not taxed. Some money paid to charities and to children with a disability is left out as well.

People who get money from the trust would still pay tax on it at their own rate. They would get a tax credit equal to 30 per cent of their share. The credit can cut their tax to zero, but any extra is lost. Companies get no credit.

The main bill also gives trusts two ways out. They can move all their assets into a company or a trust with fixed shares. If they do it between 1 July 2027 and 30 June 2030, there is no income tax bill. Or they can lock in a fixed share for each person from the 2028-29 year.

Waiting in the House

The Treasurer brought the bill into the House of Representatives on 14 October 2026, along with the main bill. 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.

It would start on the first 1 January, 1 April, 1 July or 1 October after it becomes law. The tax would apply from the tax year that includes 1 July 2028.

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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