Tax reform is changing. What private groups need to know before 2028.

A 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 the 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. That distinction is particularly important for private groups that have historically distributed trust income to corporate beneficiaries — commonly known as bucket companies.

Depending on the final legislation and the way income subsequently moves through the group, the effective tax outcome may therefore differ materially from the current regime.

What is settled — and what is not.

One of the most important distinctions for clients is that the reform package is progressing at different stages.

The capital gains tax and negative gearing measures are enacted and principally commence from 1 July 2027.

The Government has announced the discretionary trust minimum-tax regime for commencement from 1 July 2028, while implementation details continue to be developed.

Client planning should therefore distinguish clearly between enacted law, announced policy and implementation details that may still change.

1 July 2027 becomes an important valuation date.

The CGT reforms create an important transition point for relevant assets held across 1 July 2027.

The rules seek to distinguish gains accruing before commencement from gains arising afterwards.

For private companies, trusts, property and other assets that can be difficult to value, contemporaneous supporting evidence may therefore become important when a later CGT event occurs.

That does not necessarily mean every taxpayer should obtain an independent valuation immediately on 30 June 2027. The appropriate approach should depend on the asset, the statutory methodology and the evidence reasonably available.

Negative gearing becomes more targeted.

From 1 July 2027, negative gearing for residential property will generally be limited to eligible new residential dwellings.

Residential property acquired before 7:30pm AEST on 12 May 2026 is protected by transitional arrangements.

For established residential property acquired after that point, excess rental deductions will generally no longer be available against unrelated income in the manner investors have historically expected.

Investors considering future acquisitions should therefore assess the investment on an after-tax cash flow basis rather than relying on historical negative gearing assumptions.

Changing structure is rarely just a tax exercise.

A higher projected tax burden does not automatically mean that a discretionary trust should be unwound or replaced with a company.

A restructure may involve capital gains tax, state transfer duty, financing arrangements, contract novations, banking, payroll, employment arrangements, insurance, asset protection and commercial agreements.

For an established operating business, changing the entity through which the business trades 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 the ability to retain 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 remain driven by commercial objectives, asset protection, succession, financing and compliance requirements, with tax forming part of that broader analysis.

Preparation can begin without rushing the decision.

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 preserve sufficient flexibility to respond as the legislative framework becomes clearer.