Earlier this year, as part of the 2026–27 Federal Budget, the Government announced it would introduce a 30 per cent minimum tax on discretionary trusts from July 1, 2028. A trust is a structure in which a trustee acts on behalf of the trust's members.
According to the Council of Small Business Organisations Australia (COSBOA), many of its members are concerned that these reforms will result in them paying thousands of dollars more in tax each year. CEO Skye Cappuccio said these changes would have a significant impact on many retail businesses.
“There has been very little attention on the 350,000 to 400,000 small businesses operating through trust structures, many of whom now expect a significant hike in their tax bill and a direct impact on their business and their livelihood,” Cappuccio said.
“Many small business owners operate their business through a family trust because it is the structure that makes the most sense for their business.
“These are not businesses using aggressive tax avoidance strategies. Trusts provide a legitimate structure to support succession planning, asset protection and business continuity."
According to government data, Australia now has more than one million trusts, of which around 840,000 are discretionary trusts. These reforms were described as improving the “fairness and sustainability” of the tax system.
“Small business owners spend years prioritising the needs of their business ahead of their own financial circumstances,” Cappuccio added.
“Rather than paying themselves more, they often leave money in the business to purchase equipment, manage cash flow, employ staff and prepare for future challenges and opportunities
“They make those decisions because they believe in building something that supports their family, creates jobs and contributes to their local community.”
As part of an ongoing campaign to revise these reforms, COSBOA is collecting stories from business owners concerned about the impact of proposed tax changes on investment, succession planning, retirement planning, and long-term business confidence.
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