6 min read
Quick Summary
- The New Rules: Treasury has formally released details on the proposed 30% minimum tax for discretionary trusts, set to kick in from July 1, 2028.
- The Cost: COSBOA warns that restructuring out of these trusts could cost business owners between $15,000 and $50,000 in professional fees.
- The Stamp Duty Trap: While the Federal Government offers CGT rollover relief, Western Australia has not yet confirmed if it will waive state stamp duty on these restructures.
- Tight Deadline: The public consultation period for the draft legislation closes on July 31, 2026.
- Strategic Play: Businesses need to weigh the long-term tax savings against the immediate, heavy costs of changing their legal structure.
The landscape for Perth business owners just shifted again. On July 8, 2026, Treasury dropped a consultation paper that clarifies the Federal Government’s plan to slap a 30% minimum tax on discretionary trusts.
If you’re currently using a family trust to manage your business or investment income, the "wait and see" period is officially over. The clock is now ticking toward a July 31 deadline for submissions, and the financial stakes have become much clearer: and more expensive.
At Baseline Finance, we’re seeing a surge in calls from clients who feel stuck between a rock and a hard tax bracket. The choice is becoming simple but painful: stay in your trust and pay at least 30% tax, or pay a massive upfront fee to move your assets elsewhere.
The $50,000 "Entry Fee" for Restructuring
While the government is touting "rollover relief" to help businesses move out of trusts, that relief only covers the tax you’d usually pay when moving assets (like Capital Gains Tax). It doesn't cover the bill from your lawyers and accountants.
The Council of Small Business Organisations Australia (COSBOA) has sounded the alarm, noting that the sheer complexity of these restructures is a goldmine for consultants. For a standard family-run business in WA, the costs to legally unpick a discretionary trust and move into a company or fixed trust structure could range from $15,000 to $50,000.
This isn’t just paperwork. It involves re-drafting trust deeds, updating Commercial Property Loans, and ensuring that any Asset Finance agreements aren't breached during the transfer. For many, the cost of the "solution" might be higher than the tax they are trying to save.
The WA Stamp Duty Risk: A Postcode Lottery
The biggest elephant in the room for our Perth-based clients is stamp duty. The Federal Government can promise all the CGT relief it wants, but it has no control over the WA Office of State Revenue.
If you move a warehouse or an office from a discretionary trust into a new company structure, that is technically a change in ownership. In WA, that usually triggers a hefty stamp duty bill.
The Federal Treasury’s paper mentions a "three-year window" for restructuring (starting July 1, 2027), but without a matching commitment from the WA state government, local business owners could be left with a six-figure stamp duty bill just for trying to comply with new federal rules. This "postcode lottery" means a business in Subiaco might pay ten times more to restructure than one in Sydney if state laws don't align.
350,000 Businesses in the Crosshairs
This isn't a "big end of town" problem. Treasury estimates that between 210,000 and 350,000 small businesses will be affected by these changes.
For the ambitious individual, a discretionary trust has long been the gold standard for asset protection and flexible income distribution. If you’ve been using your trust to distribute income to family members in lower tax brackets, that strategy is effectively dead from July 1, 2028.
Even if your beneficiaries are currently paying 0% or 19% tax, the trustee will now have to pay 30% upfront. While the beneficiaries might get a credit for that tax later, they won't get a refund if their own tax rate is lower than 30%. The government is essentially keeping the change.
Your Move: The Strategy Before July 31
If you are currently holding assets in a trust: whether it's a family business or property held via SMSF Loans and associated trusts: you need a two-pronged strategy.
Step 1: The Accountant's Audit.
You need to model the actual cost. If your trust generates $200,000 in profit, what is the "tax gap" between the old rules and the 30% minimum? If that gap is $10,000 a year, spending $40,000 on a restructure has a four-year payback period.
Step 2: The Financing Review.
Changing structures often means refinancing. If you move property, your Home Loans or Commercial Development Loans will need to be re-documented. This is where Baseline comes in: we ensure that your new structure is actually "bankable" before you sign the legal docs.
The consultation period ends on July 31, 2026. If you have concerns about the cost of compliance or the lack of state stamp duty relief, now is the time to speak up through your industry body or local member.
Terms to Know
| Term | What it means for you |
|---|---|
| 30% Minimum Tax | A new "floor" on tax for discretionary trusts; you can't pay less than this at the trustee level. |
| Rollover Relief | A rule that lets you move assets to a new structure without paying Capital Gains Tax immediately. |
| Discretionary Trust | A common structure used by families to protect assets and share income flexibly. |
| Trustee-Level Tax | Tax that is paid by the person or company "running" the trust, rather than the people receiving the money. |
| Consultation Paper | A government "draft" of a law that is open for public feedback until July 31. |
Risks and Transparency
It is important to acknowledge that restructuring is not a "magic bullet." There are significant risks involved in moving away from a discretionary trust:
- Loss of Flexibility: Companies and fixed trusts do not offer the same "discretion" to change income distributions each year.
- Asset Protection: Moving assets to a new entity may reset the "clock" for certain bankruptcy and creditor protection laws.
- Financing Hurdles: Lenders may view a newly formed company as a "start-up" even if the business is old, potentially making it harder to secure Working Capital or Acquisition Finance.
- Uncertainty: There is no guarantee the WA government will provide stamp duty relief, meaning you could start a restructure only to find a massive hidden cost halfway through.
The Baseline Difference
At Baseline Finance, we don't just find you a loan; we build a Strategic Funding Plan. When tax laws change as drastically as this, you don't just need a broker: you need a partner who can sit at the table with your accountant and lawyer. We specialise in the "heavy lifting" of finance, ensuring that if you do choose to restructure, your debt follows you seamlessly and your cash flow remains protected. We provide jargon-free, honest advice to help you navigate these 2026 tax hurdles with total transparency.
Contact Baseline Finance
If you’re worried about how these trust changes will affect your borrowing capacity or your current commercial loans, let’s talk.
Phone: 08 6108 3925
Email: commercial@baselinefin.com.au
