Australia is entering a period of unusually significant tax reform, with some measures already enacted and others still being developed through consultation.
For business owners and private groups, the challenge is not simply understanding what has been announced. It is determining which rules are already law, which details remain unsettled and what — if anything — should be done now.
The most significant measures include changes to the capital gains tax regime from 1 July 2027, restrictions on negative gearing for certain residential property investments from the same date and the Government's proposed 30 per cent minimum tax for discretionary trusts from 1 July 2028.
The result is a planning environment in which preparation is increasingly important, but premature restructuring can carry significant tax, duty and commercial consequences.
Key dates to have on your radar.
These measures do not commence at the same time. Understanding the sequence is important before making major investment or restructuring decisions.
Negative gearing grandfathering
Residential properties acquired before 7:30pm AEST on 12 May 2026 are generally protected from the new negative gearing restrictions.
CGT and negative gearing reforms become law
The first tranche of the reform package establishes the new CGT and residential negative gearing framework applying from 1 July 2027.
Prepare valuation evidence
Businesses and investors should consider the records and valuation evidence likely to be required for assets held across the CGT transition date.
CGT and negative gearing changes commence
New CGT treatment begins and residential negative gearing becomes generally limited to eligible new residential property.
Review trust structures
Model the proposed minimum-tax position, review corporate beneficiaries and assess whether there is a genuine commercial case for restructuring.
30% discretionary trust minimum tax
The Government intends the trustee-level minimum tax to commence from this date, subject to the final implementation framework.
The CGT and negative gearing reforms are enacted. The discretionary trust minimum-tax regime has an announced 1 July 2028 commencement date while implementation details continue to be developed.
A proposed 30% minimum tax changes the planning equation.
From 1 July 2028, the Government intends to introduce a minimum tax rate of 30 per cent on the taxable income of discretionary trusts, subject to exclusions and final implementation rules.
Under the current policy model, the trustee would pay the minimum tax. Beneficiaries other than corporate beneficiaries would generally receive non-refundable credits for tax payable by the trustee.
Corporate beneficiaries would not receive that credit. This is particularly relevant for private groups that have historically distributed trust income to corporate beneficiaries, commonly referred to as bucket companies.
Existing arrangements should therefore be modelled before the proposed commencement date, but major structural changes should not be undertaken solely on the basis of preliminary calculations.
Avoid treating consultation as final legislation.
One of the most important distinctions for clients is that the reform package is progressing at different stages.
The CGT and negative gearing measures are enacted and apply principally from 1 July 2027.
The Government has announced a 30 per cent minimum tax for discretionary trusts from 1 July 2028, while Treasury consultation continues on implementation of the regime.
Advice should therefore distinguish clearly between current law, announced policy and implementation details that remain subject to change.
1 July 2027 becomes an important valuation date.
The CGT reforms replace the existing discount treatment for relevant future gains with cost base indexation and a 30 per cent minimum tax framework for gains accruing from 1 July 2027.
Transitional rules distinguish gains accruing before the commencement date from gains arising afterwards.
For private companies, trusts, property and other assets that can be difficult to value, contemporaneous evidence may become important when a later CGT event occurs.
That does not necessarily require every taxpayer to obtain an independent valuation on 30 June 2027. The appropriate evidentiary approach should be considered having regard to the asset and the available statutory methods.
Documentation and valuation evidence may become increasingly important for assets held across the transition date.
Negative gearing becomes more targeted.
From 1 July 2027, negative gearing for residential property will generally be limited to eligible new builds.
Residential property acquired before 7:30pm AEST on 12 May 2026 is protected by grandfathering arrangements.
For established residential property acquired after that time, excess rental deductions will generally be quarantined rather than deductible against unrelated income such as salary, wages or business income.
Investors should therefore assess after-tax cash flow and the character of the property before making future acquisition decisions.
Changing structure is rarely just a tax exercise.
A higher projected tax burden does not automatically mean a discretionary trust should be unwound or replaced with a company.
A restructure can involve capital gains tax, state transfer duty, financing arrangements, contract novations, banking, payroll, insurance, asset protection and commercial agreements.
For an established business, changing the operating entity can resemble a business sale from an operational perspective.
The commercial case should therefore be established before significant restructuring work begins.
Tax is only one part of the structure.
Discretionary trusts may continue to provide legitimate non-tax benefits including succession flexibility, asset protection, family wealth management and separation of business and personal assets.
Companies may provide advantages for trading businesses, including clearer separation of operating risk and retained earnings.
For many private groups, the appropriate arrangement may involve a trading company, a holding company and a discretionary trust. There is no universal model.
Structure recommendations should be driven by commercial objectives, asset protection, succession, financing and compliance requirements, with tax considered as part of that broader analysis.
Plan for today's law. Keep tomorrow flexible.
Prepare for the announced rules.
Understand current structures, identify affected entities, retain relevant records and model the likely position if the announced measures commence as intended.
Preserve flexibility.
Avoid irreversible transactions where the commercial case is weak or implementation detail remains unsettled. Reassess as further legislation and guidance becomes available.
Preparation can begin without rushing the decision.
Confirm your current entity and ownership structure, including trusts, companies and corporate beneficiaries.
Identify assets likely to remain held across 1 July 2027 and consider what records may support future valuation work.
Review discretionary trusts and corporate-beneficiary arrangements before the proposed 1 July 2028 commencement.
Model the tax and commercial consequences of the current structure compared with realistic alternatives.
Quantify CGT, duty, financing and operational costs before undertaking a restructure.
Review the position again as Treasury, Parliament and the ATO release further implementation material.
The next two years require planning, not panic.
These reforms are significant, particularly for private groups that have relied on discretionary trusts and corporate beneficiaries as part of their longer-term structure.
But tax should not be considered in isolation. The cost of changing a structure can be substantial, and trusts may continue to serve important commercial, succession and asset-protection purposes.
The priority is to understand the current position, identify the critical dates and retain sufficient flexibility to respond as the legislative framework becomes clearer.
