A 30% Trustee Tax Starts 1 July 2028. The Three-Year Restructure Window Opens First — and It Runs Through Your Loan Book

What Treasury actually released

On 3 September 2026, Treasury released exposure draft legislation for the 30% minimum tax on discretionary trusts announced in the 2026–27 Budget on 12 May. Consultation closes on 18 September 2026. The Australian Taxation Office’s guidance page on the measure carries the line that matters most for anyone tempted to act early: this measure is not yet law.

That reads like an accountant’s problem, and for the next fortnight it is. After that it becomes a broker’s problem, because the draft does two things that land directly in a loan file. It puts a hard date on a structural decision for a large number of family trusts. And it opens a three-year window in which assets — including mortgaged property — may be moved out of those trusts.

Assets do not move quietly when there is a mortgage over them. They move through your desk.

The mechanics, in the order they hit a file

According to the ATO’s published guidance on the measure, the government announced a 30% minimum tax on discretionary trusts, applying from 1 July 2028. Non-corporate beneficiaries who are presently entitled to a share of the net income of the trust will be able to claim a non-refundable income tax credit for the tax paid by the trustee.

The word doing the work there is “non-refundable”. Where trust income has historically been distributed to a beneficiary whose marginal rate sits below 30%, the credit does not hand the difference back. The practical effect described by the design is that the benefit of splitting income to lower-rate beneficiaries is reduced. Whether and how that applies to any particular client is a question for their accountant, not for you — but it is the reason the phone will ring.

The Treasurer’s media release of 3 September sets out the carve-outs. Charitable trusts, special disability trusts, superannuation funds, and deceased estates and discretionary testamentary trusts sit outside the regime, along with primary production income and certain income relating to vulnerable minors. The release also states that fewer than 10 per cent of Australia’s 2.7 million active small businesses will be affected by the reforms in any given year, and that the draft provides refunds for franking credits relating to income subject to the minimum tax.

Analysis published by Pitcher Partners on 3 September (Alexis Kokkinos, Yina Tang, Chanel Palmer and Leo Gouzenfiter) notes that fixed trusts, unit trusts, managed investment trusts, attribution managed investment trusts and widely-held trusts fall outside the regime, and that the exposure draft “expands the definition of a fixed trust to allow more commercial trust structures” where discretionary elements do not materially affect beneficiaries’ rights. The same analysis flags a sharper point for anyone running a bucket company: the 30% trustee tax is not creditable to a beneficiary that is a company, which Pitcher Partners describes as producing double taxation in the range of 55% to 60%.

Two doors, and both of them open onto your settlement diary

The draft gives affected trusts two routes.

Door one — restructure. Roll-over relief is available for three years from 1 July 2027, allowing the transfer of assets out of discretionary trusts to entities that are not discretionary trusts. Pitcher Partners puts the window at 1 July 2027 to 30 June 2030 for transfers to companies or fixed trusts, and notes the relief defers income tax and capital gains tax but “does not remove potential stamp duty and other transaction costs”.

Door two — elect, and lock. This is the amendment that made the news on 4 September. Rather than restructure, a discretionary trust that exists as at 1 July 2028 may elect into a new regime and nominate fixed distributions to pre-nominated beneficiaries. King & Wood Mallesons, writing on 4 September (Richard Snowden, Peter Scott, Jane Ma and Sam Ellul), refers to the resulting vehicle as an “excluded election trust”, or EET, and sets out the conditions: each nominated beneficiary’s share of income and capital must be equal — the same proportion of income and capital — and the nomination “generally cannot be varied, with only two narrow exceptions permitted: the death of a specified beneficiary; or a relationship breakdown involving two specified beneficiaries”. Elections take effect in the 2028–29 income year.

The penalty for backing out is severe. On revocation, King & Wood Mallesons states, “beneficiaries are treated as never having been presently entitled, and the trustee is assessed on all of the trust’s net income at the top marginal rate plus Medicare levy” in that year.

Council of Small Business Organisations Australia chief executive Skye Cappuccio, quoted by The Adviser on 4 September, welcomed the pathway while naming the trade-off. “For businesses that can maintain fixed distributions, this provides a pathway to continue operating through their existing trust structure,” she said. Businesses choosing it “may retain their existing structure and tax treatment, but they will give up some of the flexibility”. On the revocation consequence, she was blunter: “This is unnecessarily punitive and does not reflect the realities of family businesses.”

Pitcher Partners adds that nominated beneficiaries may include individuals, trusts and certain companies, but not partnerships or complying superannuation funds. The two routes are alternatives, not a sequence.

Why this is a broker problem and not just an accountant problem

Nothing above is advice you can give. All of it changes files you already hold.

1. Locked distributions change the income on your self-employed applications

A large share of self-employed applications are assessed on trust distributions appearing in a client’s individual return, often allocated across a couple in whatever proportion suited that year. If a client elects into the new regime, the draft as described requires equal proportions of income and capital across nominated beneficiaries, fixed, with almost no ability to vary.

For a broker, that has a practical consequence from the 2028–29 income year onward: the distribution pattern that produced a servicing outcome in one year may no longer be adjustable in the next. Where you have historically seen an applicant’s declared income move around depending on how the trust distributed, that movement may stop. It could go either way for any given client — some applicants will show more income, some less. The point is that it becomes a fixed input rather than a flexible one, and that changes how you plan a client’s borrowing over a multi-year horizon rather than a single application.

2. Mortgaged property inside a trust does not just get transferred

This is the part the tax commentary does not cover, because it is not a tax question.

If a client takes the restructure route and moves a property out of a discretionary trust into a company or fixed trust, the registered proprietor changes. Where that property secures a loan, the transfer is a matter for the incumbent lender. In practice that generally means the existing facility is discharged and a new application is submitted in the name of the new entity — a new credit assessment, a new valuation, potentially lenders mortgage insurance where the loan-to-value ratio has moved, and any break costs on a fixed rate.

Do not assume it is a formality, and do not assume policy is uniform. Some lenders have limited appetite for company borrowers or non-standard trust structures. A client sitting comfortably with a lender today, inside a discretionary trust, may not fit that lender’s policy tomorrow inside a corporate structure. Confirm the position with each lender rather than reasoning from one.

A lighter version of the same issue applies where a trustee changes rather than the trust itself — security documents may need variation. That is worth raising early rather than discovering it a week out from a deadline.

3. Stamp duty: the reporting has not been consistent

Trade press coverage on 4 September characterised the amendments as removing expected state stamp duty exposure. The professional-firm analysis is more precise, and the distinction matters when you are talking to a client.

Pitcher Partners states that the roll-over relief “does not remove potential stamp duty and other transaction costs”. King & Wood Mallesons notes that Treasury designed the election relief in part because a roll-over into a fixed trust or corporate structure “could incur significant state and territory duties”, but that the election itself provides no direct stamp duty exemption.

Both are consistent once you read them together. The election sidesteps a duty event by avoiding the transfer altogether — the trust stays where it is. The restructure route moves assets, and state and territory duty remains a live cost on that route. So when a client says “I read that the stamp duty problem is fixed”, the accurate answer is that one of the two doors avoids the transfer entirely, and the other does not. Then send them to their accountant.

4. Your own brokerage is probably in scope of the same question

Plenty of broker businesses operate through a discretionary trust, with commissions and trail income running through it. If yours does, the same decision is scheduled for you, on the same dates — and it flows into your own borrowing capacity, since a locked distribution proportion changes the income you can declare on your next application. Book time with your own accountant before the 2027 window opens, not during it.

Where a broker’s job stops

None of this is territory for a credit licensee to advise on. Trust structuring and tax elections require qualified tax advice, and the risk of straying is real: a broker who steers a client toward or away from an election, however casually, is well outside their remit.

The workable posture is narrow and defensible. Identify which of your clients hold property or draw income through a discretionary trust. Tell them a change has been proposed with dates attached, in general terms. Refer them to their accountant or a qualified tax adviser. Record the referral in the file. Then do the part that is your job: work out what each possible outcome does to their loan — the consent, the reassessment, the valuation, the timing — and be ready when their accountant tells them which door they are walking through.

Where compliance obligations are concerned — including how the best interests duty applies to conversations of this kind and what should sit on file — check the position with your licensee or aggregator’s compliance team rather than working from a general article.

What to review this week

1. Run a structure search across your book. Filter your CRM for applicants where the borrower, guarantor, trustee or security holder is a trust. If your CRM cannot filter on entity type, this is the week to start tagging.
2. Split the list in two. Clients with a trust and a mortgaged property in it face a possible transaction. Clients whose trust only generates income face a possible servicing change. The conversations are different.
3. Check your fixed-rate expiries against the window. Any client in the first group with a fixed rate rolling between mid-2027 and mid-2030 should have their structure question resolved before you set the next rate term, not after.
4. Note the excluded categories. Testamentary trusts, special disability trusts, charitable trusts and superannuation funds sit outside the measure, as does primary production income. That removes some clients from the list before you call anyone.
5. Draft a two-sentence client message. One sentence that a change has been proposed and is not yet law; one sentence recommending they raise it with their accountant. Nothing more. Have your compliance team sight it before it goes out.
6. Ask your BDMs the entity question now. Specifically: what is required to transfer a mortgaged security from a discretionary trust to a company or fixed trust, and does the lender treat it as a variation or a new application? Getting written answers in 2026 is cheaper than improvising in 2028.

What to watch next

Consultation closes 18 September 2026, and Pitcher Partners notes Treasury has indicated this package represents only the first tranche, with further measures to come. The draft can change — it already has once, since the election pathway is itself a response to consultation. The dates to keep in view are 1 July 2027, when roll-over relief is proposed to begin, and 1 July 2028, both the proposed start of the minimum tax and the date on which a trust must exist to make the election.

Watch, too, for lender policy responses. Nobody has published a position on how they will treat restructure-driven transfers, and the lenders that publish clear guidance first will make life easier for the brokers who ask early.

The takeaway

A tax measure with a 2028 start date does not feel urgent in September 2026. But the roll-over window opens in July 2027, and the decisions that fill it will be made in the year before that — in accountants’ offices, mostly without a broker in the room. The brokers who know which of their clients are in scope, and what each door does to the loan, will be the ones the accountant calls. The rest will find out at discharge.

It costs an hour to tag your book. Do that this week.