The Family Trust Tax Debate Is Missing Something Important: How Family Businesses Actually Operate
When governments talk about trusts as a tax-planning advantage, many business owners hear something different:
“Does anyone understand why our family uses a trust in the first place?”
Written by: Melissa Cunliffe (CA)
What has changed?
On 14 October 2026 the Government introduced legislation for a proposed minimum tax on discretionary trust income from 1 July 2028.
The Government says the aim is fairness between income earned from assets and wages, and that most small businesses would be unaffected in a given year. Proposed exclusions, elections and restructuring relief are important, but the full consequences depend on the final enacted law and individual circumstances.
Family Trust Tax Changes and Family Business Operations
Why should you care?
Here is where the policy debate needs more practical detail. A discretionary trust is not just a tax calculation.
For many families it sits within arrangements built over decades for business ownership, succession, managing different family circumstances and keeping the business operating through difficult years. That does not exempt trusts from scrutiny. It does mean the cost of changing them should be assessed alongside any projected tax benefit.
A policy that treats the trust simply as a way to divide income risks overlooking those practical realities.
What we are seeing in practice
A family runs a regional trading business through a trust.
One parent works full time in the business, another handles administration, adult children are gradually entering management, and a related company retains some profits for future investment. They ask, “Are we being penalised for having the structure we were advised to use?”
Whether they are affected turns on their particular income, beneficiaries, elections and any exclusions — not on the mere existence of the trust.
What can you do now?
Map each trust’s activities, beneficiaries, historical decisions and relationship to other entities.
Distinguish business or primary-production income from investment income where relevant.
Model different distribution and election scenarios only after reviewing the actual draft rules.
Do not restructure solely because of headlines: first quantify tax, stamp duty, CGT, lending and succession consequences.
Something to think about
A fair discussion of reform should ask not only who pays more tax, but what additional costs, disruption and uncertainty are imposed on genuine family businesses.
At 4P’s Future Accounting, we help family businesses understand the numbers, protect what they have built and plan for what comes next. The right answer depends on your circumstances, so obtain specific advice before acting.
Concerned about how proposed trust tax changes could affect your family business?
Contact 4P's Future Accounting to discuss your existing structure and long-term business plans.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
