Australia is entering an unusually significant period of tax reform. Some measures are now law. Others remain subject to implementation work and consultation.
For business owners and private groups, the question is no longer simply what has been announced. The more important questions are what has actually been enacted, when each measure begins and whether action is required now.
The reforms span capital gains tax, residential negative gearing and the Government's proposed minimum tax for discretionary trusts. Each operates on a different timetable and each can affect existing structures in materially different ways.
That makes preparation important. It does not necessarily make immediate restructuring appropriate.
The road to 2028.
A practical sequence of the dates most likely to matter when reviewing investments and private-group structures.
Residential property transition point
Residential property held before 7:30pm AEST on 12 May 2026 is generally protected by transitional arrangements for the new negative gearing rules.
CGT and negative gearing reforms enacted
The legislative framework was enacted ahead of its principal commencement from 1 July 2027.
CGT transition point
Businesses and investors should consider what valuation and supporting evidence may be required for assets held across the transition.
New CGT and negative gearing rules commence
The new capital gains framework begins and residential negative gearing becomes more targeted.
Structure review window
Private groups should use this period to model the proposed trust rules, review corporate beneficiaries and quantify genuine restructuring alternatives.
Proposed discretionary trust minimum tax
The Government intends the 30% trustee-level minimum tax to commence, subject to the final implementation framework.
The CGT and negative gearing measures are enacted. Implementation of the discretionary trust minimum-tax regime continues to be worked through.
A 30% minimum tax changes the planning equation.
From 1 July 2028, the Government intends trustees of discretionary trusts to pay a minimum tax of 30 per cent on taxable income, subject to exclusions and the final implementation framework.
Beneficiaries other than corporate beneficiaries are expected to receive non-refundable credits for tax payable by the trustee. Corporate beneficiaries are not expected to receive the same credit.
That distinction matters for private groups that have historically distributed trust income to corporate beneficiaries, commonly referred to as bucket companies.
How the proposed minimum tax may operate
Under the current policy model, the trustee would be responsible for ensuring the taxable income of the discretionary trust is subject to a minimum rate of 30 per cent.
Non-corporate beneficiaries are expected to receive a non-refundable credit for trustee-level tax. Corporate beneficiaries are not expected to receive the equivalent credit.
The Medicare levy remains a separate consideration for individuals and is not eliminated merely because tax has already been paid at trustee level.
The final treatment remains dependent on the legislation and implementation framework applying at commencement.
Corporate beneficiaries and effective tax rates
Corporate beneficiaries have historically been used by many private groups to retain trust income at corporate tax rates.
The proposed minimum-tax model could materially alter the economics of those arrangements where trustee tax, company tax and subsequent shareholder taxation interact.
The webinar presented an example in which $100 of trust profit ultimately moved through the trustee, corporate beneficiary and an individual shareholder. Under the assumptions used, the combined illustrative effective tax burden reached 69.71 per cent.
This example is illustrative only and should not be treated as a universal outcome. Actual results depend on distributions, tax rates, franking, beneficiary circumstances and the final legislation.
Lower-income beneficiaries and non-refundable credits
A non-refundable credit can create less intuitive outcomes for beneficiaries whose personal tax liability is below the trustee-level tax already paid.
A beneficiary receiving a relatively modest distribution may therefore be unable to recover all of the tax paid at trustee level.
This is particularly relevant where trust distributions have historically been allocated among family members with differing taxable incomes.
Planning considerations before 1 July 2028
Existing corporate-beneficiary arrangements should be identified and modelled before the proposed commencement.
Where commercially appropriate, private groups may need to consider the use of existing strategies before 30 June 2028 while retaining flexibility to alter the approach thereafter.
This does not mean every group should accelerate distributions or restructure. Cash flow, retained earnings, asset protection, Division 7A, succession and other commercial factors remain relevant.
Enacted law and proposed policy are not the same thing.
One reason the current environment is difficult for clients is that the major measures are progressing at different stages.
The capital gains and negative gearing reforms are enacted, with their principal commencement from 1 July 2027.
The discretionary trust minimum tax has an announced commencement from 1 July 2028, but implementation matters continue to be worked through.
Client communication should therefore distinguish clearly between current law, announced Government policy and details that remain capable of change.
30 June 2027 becomes an important evidence date.
The CGT changes create an important transition for assets held across 1 July 2027.
For private companies, trusts, property and other assets without readily observable market values, evidence retained around the transition may become important when a later CGT event occurs.
The practical question is therefore not simply whether a valuation should be obtained. It is what evidence should be preserved so that future calculations can be supported.
Valuation and cost-base methods
Transitional calculations require affected taxpayers to distinguish the portion of future gains attributable to periods before and after commencement.
Depending on the asset and applicable method, the calculation may involve market-value evidence or an alternative statutory approach.
Private-company shares, units in private trusts, specialised property and business goodwill can require particular attention because historical evidence may be difficult to recreate years later.
Should an independent valuation be obtained?
An independent valuation may provide stronger evidence for difficult-to-value assets or where the potential future gain is material.
It should not be assumed that every taxpayer automatically requires an independent valuation on 30 June 2027.
The cost and benefit should be considered having regard to the asset, likely holding period, available statutory methods and contemporaneous information.
Records worth preserving
Relevant material may include financial statements, tax returns, acquisition records, valuations, property information, shareholder records, unit registers, management accounts and evidence of material commercial events around the transition date.
For private assets, preserving source documentation now may be materially easier than recreating the position when a future disposal occurs.
Negative gearing becomes more targeted.
From 1 July 2027, negative gearing for residential property becomes more restricted, with particular treatment for eligible new residential dwellings.
Investors acquiring established residential property can no longer assume that excess rental deductions will offset unrelated income in the same way they historically have.
Greater emphasis therefore falls on purchase price, financing, holding costs, projected rent and after-tax cash flow before an acquisition is made.
Changing structure is rarely just a tax exercise.
The possibility of a higher future tax burden does not automatically mean that a discretionary trust should be unwound or replaced with a company.
Moving an established operation between entities can involve capital gains tax, state transfer duty, refinancing, contract novations, employee and payroll changes, bank accounts, insurance and commercial agreements.
For an established business, the operational consequences can resemble a business sale.
Transfer duty and tax costs
The transfer of business assets or property can create state duty and CGT consequences unless specific relief is available.
The webinar highlighted that duty costs in some jurisdictions can be material depending on the asset and transaction.
Actual duty treatment is jurisdiction-specific and should be confirmed before any restructure proceeds.
Operational consequences
A change in operating entity may require contracts to be assigned or re-executed, bank facilities amended, payroll systems changed, employees transitioned and licences or registrations updated.
Finance providers, insurers, suppliers, landlords and customers may also need to consent to changes.
Those implementation requirements can be as important as the tax result.
Indicative professional costs
The webinar suggested that formal structure reviews for relatively straightforward small businesses may commonly fall around $1,500 to $3,000, with materially higher fees for complex groups.
Full restructuring projects may involve professional fees of $15,000 to $20,000 or more before external costs such as duty, legal documentation, refinancing and contract changes.
These figures reflect webinar commentary only. They are not PRATT Partners pricing and should not be treated as a quotation for services.
Rollover relief and timing
Government material contemplates transition relief for eligible taxpayers considering restructures from discretionary trusts.
Any rollover should be considered only after confirming eligibility, state duty consequences, asset protection implications and the longer-term commercial position.
Tax remains only one part of the structure.
Discretionary trusts continue to have legitimate non-tax purposes including asset protection, succession flexibility, family wealth management and separation of business and personal assets.
Companies may be well suited to trading operations where clearer separation of operating risk and retained earnings is desirable.
A commercially sensible private-group structure may involve a trading company, a holding company and ultimately a discretionary trust. Other clients will require different arrangements.
Structure advice should therefore consider commercial risk, asset protection, succession, financing, Corporations Act obligations and tax together rather than optimising any single issue in isolation.
Plan for today's law. Keep tomorrow flexible.
Prepare for the announced framework.
Confirm current structures, identify affected entities, preserve relevant records and model the likely position if the measures operate as presently intended.
Preserve the ability to change course.
Avoid irreversible transactions where the commercial rationale is weak or implementation details remain uncertain. Review the position as further material becomes available.
Preparation can begin without rushing the decision.
Confirm the actual ownership structure of trusts, companies, corporate beneficiaries and investments.
Identify assets expected to remain held across 1 July 2027 and consider the evidence likely to support future CGT calculations.
Review discretionary trust and corporate-beneficiary arrangements before the proposed 1 July 2028 commencement.
Model realistic alternatives rather than assuming a company will automatically produce a better outcome.
Quantify CGT, transfer duty, finance and operational costs before undertaking a major restructure.
Establish a Plan A and Plan B so significant decisions can be revisited as the legislative position develops.
Clear advice matters more when the rules are moving.
Preliminary advice provided during a period of legislative uncertainty should clearly state what is known, what remains uncertain and what assumptions have been made.
A diagram showing the relationship between trusts, companies, shareholders and beneficiaries can also be particularly useful.
Advice should define its scope, identify information relied upon and make clear that recommendations may need to be revisited as legislation, Treasury material or ATO guidance changes.
What a preliminary structure review should cover
A preliminary review should identify the client's current structure, objectives, key assets, operating entities and known tax exposures.
It should identify reforms potentially relevant to the client without presenting unsettled implementation matters as final law.
Detailed restructuring recommendations can then be considered when the information required for reliable modelling is available.
Scope and reliance considerations
Advice should identify the client to whom it is addressed, the purpose for which it has been prepared, and the information and assumptions relied upon.
Where consultation materials or announced policy are relevant, the advice should state that the position may change before commencement.
Material changes to law, guidance or client circumstances should trigger further review.
Structure diagrams and internal preparation
A visual structure diagram can help confirm ownership, trustees, shareholders, beneficiaries and operating entities before advice is prepared.
It may also identify discrepancies between the way the client understands the structure and the legal relationships recorded in underlying documents.
Firms should ensure team members understand the distinction between enacted measures and proposals so client questions are handled consistently.
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 arrangements.
But the existence of a tax change does not, by itself, make restructuring the correct response.
The stronger approach is to establish the current position, understand the critical dates, quantify the likely outcomes and preserve enough flexibility to respond as the legislative framework becomes clearer.