Quick Summary
The key reforms affecting family groups are:
30% Minimum Tax on Discretionary Trusts
Three-Year Trust Restructuring Rollover Relief
Bucket Company strategies significantly impacted
50% CGT Discount abolished
30% Minimum Tax on Capital Gains
Pre-CGT assets lose full future exemption
Negative gearing restricted to new builds
Existing investment properties are grandfathered
Family succession, wealth transfer and estate planning strategies
Key Dates
| Date | Event |
|---|---|
| 12 May 2026 | Budget announcement |
| 8 July 2026 | Treasury consultation on trust reforms released |
| 3 September 2026 | Exposure draft trust legislation released |
| 1 July 2027 | Negative gearing reforms commence |
| 1 July 2027 | Capital Gains Tax reforms commence |
| 1 July 2027 | Future gains on pre-CGT assets become taxable |
| 1 July 2027 | Trust restructuring rollover relief commences |
| 1 July 2028 | Proposed commencement of 30% minimum trust tax |
Who This Impacts
These reforms are particularly relevant to:
Family discretionary trusts
Family investment trusts
Family investment companies
High-net-worth families
Property investment families
Multi-generational wealth structures
Families using bucket companies
Families with significant share portfolios
Families holding commercial property
Families planning succession or wealth transfer
Families holding pre-CGT assets acquired before 20 September 1985
1. 30% Minimum Tax on Discretionary Trusts
What is changing?
From 1 July 2028, the Government proposes a minimum 30% tax on discretionary trust income. The tax is levied at trustee level. Beneficiaries generally receive tax credits for tax already paid.
Why was it introduced?
The Government's stated objective is to reduce the benefits of income splitting through discretionary trusts and better align trust taxation with wage earners.
Why this matters
Many family groups currently distribute income to:
Adult children
Low-income spouses
Retired parents
Other family beneficiaries
to reduce overall family tax.
The effectiveness of these strategies will be significantly reduced.
2. Bucket Company Strategies
What is changing?
The reforms specifically target corporate beneficiary arrangements.
Historically, many family groups used "bucket companies" to cap tax on trust income at company tax rates.
Under the proposed reforms:
Corporate beneficiaries will generally not receive the same credit treatment as individuals.
The effectiveness of bucket company structures may be substantially reduced.
Why this matters
This will likely trigger widespread reviews of:
Family trust structures
Corporate beneficiaries
Retained earnings strategies
Asset holding arrangements
3. Trust Restructuring Relief
What is changing?
A restructuring rollover relief period commences from 1 July 2027 and is intended to facilitate restructuring ahead of the trust reforms.
Purpose
The relief is designed to allow movement of assets from discretionary trusts into alternative structures without immediate tax consequences in many circumstances.
Why family groups should care
This could be the most important planning window available before the new trust tax commences.
4. Capital Gains Tax Reform
What is changing?
From 1 July 2027:
The 50% CGT discount is removed.
Inflation-based cost base indexation is introduced.
A 30% minimum tax on capital gains is introduced.
Who is affected?
Family groups holding:
Shares
Managed funds
Investment properties
Trust investments
Long-term investment assets
Why it matters
Many family investment strategies have been built around the 50% CGT discount. Future investment returns and exit strategies will need to be reconsidered.
5. Transitional CGT Rules
What is changing?
The Government has not simply grandfathered the old CGT rules.
Instead:
Gains accrued before 1 July 2027 retain old treatment.
Gains accrued after 1 July 2027 fall under the new regime.
Why it matters
Many family groups may need:
Asset valuations
Trust valuations
Property valuations
around 1 July 2027 to support future CGT calculations.
6. Pre-CGT Assets
What is changing?
Historically, assets acquired before 20 September 1985 were completely outside the CGT system.
The reforms bring future gains on these assets into the CGT regime from 1 July 2027. Historical gains remain protected.
Family farms
Commercial property
Legacy investment portfolios
Long-held family assets
7. Negative Gearing Changes
What is changing?
Negative gearing remains available for:
Existing investment properties
New residential builds
but is restricted for newly acquired established residential properties.
Why family groups should care
When purchasing future investment properties, family groups may increasingly favour:
New housing developments
Off-the-plan purchases
Build-to-rent opportunities
rather than established housing stock.
8. Estate and Succession Planning
These reforms will affect family succession planning across:
Trust structures
Intergenerational wealth transfers
Family asset ownership
Future property sales
Family investment portfolios
Families should review:
Trust deeds
Corporate beneficiaries
Succession plans
Existing trust structures
Estate planning documents
before the major commencement dates.
Bottom Line for Family Groups
The three reforms likely to have the greatest financial impact are:
30% Minimum Tax on Discretionary Trusts.
Capital Gains Tax reform,
The ability to restructure family trust arrangements during the 2027-2030 rollover relief period.
For many affluent family groups, these reforms will result in the largest review of trust, investment, succession and wealth transfer strategies in decades.