Australia is entering an unusually significant period of tax reform. The 2027 CGT and negative-gearing changes are now law. The proposed 2028 discretionary-trust rules are still being worked through.
For business owners and private groups, the important questions are not simply what has been announced, but what has actually been enacted, when each measure begins and whether action is required now.
From 1 July 2027, major changes to the CGT discount and residential negative gearing will commence. The Government has also announced a 30% minimum tax for discretionary trusts from 1 July 2028, with implementation details still under consultation.
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 package received Royal Assent, ahead of the principal commencement of the reforms from 1 July 2027.
CGT transition evidence date
Businesses and investors holding assets across 1 July 2027 should consider what records, valuation evidence and other information may be needed to support the portion of a future gain attributable to periods before and after commencement.
New CGT and negative-gearing rules commence
The new CGT 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.
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% 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. Existing arrangements should be reviewed before commencement, but not changed merely because a reform has been announced.
For broader trust administration and tax considerations, see our Tax Tips for Trusts .
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%.
Non-corporate beneficiaries are expected to receive a non-refundable credit for trustee-level tax. Corporate beneficiaries are not expected to receive an equivalent credit.
The Medicare levy and the beneficiary's wider tax position remain separate considerations.
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 denial of the trustee-level credit to corporate beneficiaries could materially alter the overall tax outcome where trustee tax, company tax and subsequent shareholder taxation interact.
The eventual result will depend on the company's tax position, subsequent distributions, franking credits, 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.
Planning considerations before 1 July 2028
Existing corporate-beneficiary arrangements should be identified and modelled before the proposed commencement.
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 decisions 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.
From 1 July 2027, the existing 50% CGT discount framework is replaced for affected post-commencement gains by inflation indexation and a 30% minimum tax on real gains, subject to transitional rules and exceptions.
The reforms are prospective. Value accumulated before commencement remains subject to the existing framework, making evidence around the transition particularly important for assets held across 1 July 2027.
For private companies, trusts, property and other assets without readily observable market values, the practical question is not simply whether a valuation should be obtained. It is what evidence should be preserved so that a future CGT calculation can be supported.
PRATT Partners provides tax and structuring advice for businesses and private groups considering significant transactions, restructures and capital gains issues.
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 another statutory approach.
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.
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.
Negative gearing becomes more targeted.
From 1 July 2027, negative gearing for residential property becomes more targeted. Residential properties held before 7:30pm AEST on 12 May 2026 are generally protected by transitional arrangements, while eligible new residential dwellings continue to receive concessional treatment.
For established residential property acquired after the announcement, affected rental losses can generally be applied against residential-property income, including relevant capital gains, and excess losses can be carried forward. They will not generally be deductible against unrelated income such as salary and wages.
Purchase price, gearing, projected rent, holding costs and after-tax cash flow therefore become even more important before an investment decision 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. Before acting, the expected ongoing benefit should be compared with the complete implementation cost and commercial impact.
See our business advisory services for broader commercial and structuring support.
Transfer duty and tax costs
The transfer of business assets or property can create state duty and CGT consequences unless specific relief is available. 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.
What should be costed before restructuring?
This may include accounting and tax advice, legal documentation, valuations, transfer duty, refinancing costs, contract changes, registrations and ongoing administration.
Rollover relief and timing
Government material contemplates transition relief for eligible taxpayers considering restructures from discretionary trusts, including a three-year period from 1 July 2027.
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, holding entities and 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.
Primary sources.
The legislative and policy position in this article has been prepared by reference to primary Government material current at 28 August 2026.
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.
