Minimum 30 per cent tax on discretionary trusts – legislation now before Parliament

On 14 October 2026, the Government tabled the Bills in Parliament to introduce a minimum 30 per cent tax on discretionary trusts.

The policy has progressed from its announcement in the May 2026 Federal Budget, with a consultation paper in July, and draft legislation released in September, which included a new Excluded Election Trust (EET) election, nominating beneficiaries (including other trusts and eligible companies) to whom a specified percentage of distributions will forever be made.

Concerns raised in submissions

Grant Thornton’s submissions on the consultation paper and draft legislation raised significant concerns about the impact of the policy on small and medium-sized businesses and private groups, and made numerous recommendations to improve its design and operation.

Unfortunately, the final legislation adopts few of our recommendations, or those advanced by many other firms and organisations.

Challenges remain

Although the final legislation features some architectural and operational changes, the fundamental effect remains. Private groups will need to choose one of the following options for every individual discretionary trust:

1. Accept the minimum 30 per cent tax, with corporate beneficiaries no longer being viable.
2. Electing into the EET regime, with the accompanying restrictions on distribution flexibility.
3. Restructure assets out of the trust and into a new vehicle, with the accompanying costs of doing so.

All three options will likely impact a private group negatively.  Accordingly, it is matter of choosing the least harmful one.

Matters become more complicated in private groups with multiple trusts. A group with five discretionary trusts will need to make five choices, which may differ from trust to trust.  Further, the choices often cannot be made independently. Trusts within a private group often are connected in ways such that choices will need to be coordinated so that the private group achieves the least harmful outcome overall. 

It continues to be a source of frustration that small-to-medium businesses and private groups will be stripped of a number of commercial advantages that larger corporate groups will continue to enjoy.

Passage through Parliament

It is understood that the Opposition will not support the legislation. The Government will therefore need the support of the Greens to secure its passage through the Senate. However, the Greens have already expressed concerns with aspects of the regime, meaning there is no certainty that the legislation will ultimately be enacted in its current form.

How we can help 

We are here to help you navigate these new laws. Everyone’s circumstances are different, and you require a tailored approach that is right for you.

We’ll be speaking to clients soon about conducting a review of your affairs and providing appropriate advice. Our goal is to assist you to make decisions on an informed basis.

In the meantime, please contact your trusted Grant Thornton adviser to discuss any aspects of this policy.

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