Australia's trust tax changes: the 30% floor, the CGT overhaul, and the three-year exit window
For half a century the discretionary trust has been Australia's default wealth structure — the vehicle holding the family's investments, streaming income to whoever pays the least tax. The 2026-27 Budget ends that era on a schedule: a 30% minimum tax on trusts from July 2028, the 50% CGT discount replaced from July 2027, and — remarkably — a three-year rollover explicitly built for moving assets out of trusts. Australian advisers are calling it the biggest private-wealth restructuring event in a generation, and the offshore leg of that restructuring is already flowing through Singapore.
The short answer
On 12 May 2026, Australia's Federal Budget announced two structural changes to how private wealth is taxed. First, a 30% minimum tax on discretionary trusts, applying at the trustee level from 1 July 2028, with non-corporate beneficiaries receiving a non-refundable credit for the trustee's tax. Second, the 50% capital gains tax discount is replaced from 1 July 2027 for individuals, partnerships and trusts, with cost-base indexation returning (the pre-1999 model) alongside a second scheme in tandem. Third — and this is the part that turns policy into flows — a time-limited three-year rollover lets families move assets out of discretionary trusts without the immediate tax hit that normally makes restructuring prohibitive. Stack these on top of Division 296 — already law, adding 15% on super earnings attributable to balances above A$3 million and 25% above A$10 million from 1 July 2026 — and every large Australian family balance sheet is being repriced at once. None of the Budget measures is legislation yet; all of them are already driving decisions.
Why the 30% floor breaks the model
The discretionary trust's tax logic was streaming: the trustee distributes income each year to the beneficiaries with the lowest marginal rates — the adult child at university, the retired parent, the corporate beneficiary at 25–30% — so the family's blended rate lands far below the 45% top bracket. A 30% floor at the trustee level, even with the credit mechanism, deletes most of that arbitrage: the low-rate beneficiary's advantage is capped at reclaiming the gap between their rate and a floor they've already paid. Add the diluted CGT discount — indexation compensates for inflation, not for half the gain — and the structure loses both engines simultaneously. The trust remains useful for asset protection and succession; as a tax structure, its 50-year run is ending.
The exit window is the story
Governments rarely announce a punitive change and hand out the escape route in the same breath. The three-year restructure rollover does exactly that: it is the Commonwealth acknowledging that trust-heavy structures will need to reorganise, and subsidising the move. Domestic advisers are already using it in one direction — out of trusts, into companies. But a window that makes restructuring cheap is jurisdiction-agnostic: the same three years in which it is tax-efficient to move assets out of a trust is the window in which internationally mobile families ask the bigger question — should the investment layer stay in Australia at all? That is the conversation Australian lawyers report having weekly since May, and it is the conversation arriving in Singapore inboxes — ours included, where Australia now sits among the top reader geographies — in step with it.
Where the restructuring flow is going
| Destination | What moves there | The catch |
|---|---|---|
| Australian companies | The default domestic answer — 25–30% rate, franking intact | Solves streaming's loss, not the CGT dilution; wealth stays inside the same repricing system |
| Superannuation | Top-ups within caps | Division 296 now surcharges exactly the balances big enough to matter |
| UAE | Zero-tax residence for relocating principals | Requires genuinely moving; thin treaty utility for Asian portfolios; some flows are already re-routing to Singapore for stability |
| Singapore | The investment layer — typically a VCC or family office structure | Only works done properly: Australian residency, exit-tax and anti-avoidance rules decide everything |
For families with Asian assets, businesses or children in the region, the Singapore leg is the structurally obvious one: no capital gains tax, a 90+ treaty network doing real work on regional income, the 13O/13U exemptions where conditions are met, and — the piece Australians consistently underrate until they see it — a fund vehicle regime built precisely for the "family investment company" role the trust used to play. An umbrella VCC gives each branch of the family its own ring-fenced sub-fund, redeems at net asset value without capital-reduction mechanics, keeps the register private, and takes the tax award at fund level. Our full corridor guide — how Australians are moving wealth to Singapore — walks the structure end to end.
What has to be respected on the way out
Three hard edges, stated plainly because the marketing around this trend often skips them. Australian tax residency is sticky — a family that "moves" while its members remain Australian residents has moved nothing; the trust rules, attribution rules and the ATO follow them. Departure has its own tax events — ceasing residency triggers deemed-disposal choices on CGT assets that need modelling before, not after, the flight. And anti-avoidance is not asleep: a restructure whose only substance is a tax outcome invites Part IVA attention. The families doing this well treat it as a genuine relocation of the investment function — structure, adviser, decision-making — with Australian and Singapore counsel working the same timeline. The three-year window makes that orderly move affordable; it does not make a paper move safe.
The timetable, as it stands
- 1 July 2026 — Division 296 live (law): +15% on super earnings attributable to balances A$3–10M, +25% above A$10M; realised earnings only, thresholds indexed.
- 1 July 2027 — 50% CGT discount replaced (announced; consultation pending).
- 1 July 2028 — 30% trust minimum tax begins (announced; consultation pending).
- The rollover window — three years, terms to be confirmed in draft legislation. Families planning a cross-border restructure are sequencing now so the window is used, not discovered late.
Restructuring out of an Australian trust — and weighing Singapore?
Tell us the shape of the structure — what the trust holds, who the beneficiaries are, and how much of the family's future is in Asia. We'll walk you through how the Singapore layer works — VCC, family office, the 13O/13U conditions — and connect you with MAS-licensed professionals who work alongside Australian counsel on exactly these moves.
Speak to a specialist →What are Australia's trust tax changes in 2026?
In the 2026-27 Federal Budget (12 May 2026), the Australian Government announced a 30% minimum tax on discretionary trusts applying at the trustee level from 1 July 2028, with non-corporate beneficiaries receiving a non-refundable credit for tax paid by the trustee. Alongside it: the 50% capital gains tax discount is to be replaced from 1 July 2027 with cost-base indexation plus a second scheme operating in tandem, and a time-limited three-year rollover will allow assets to be transferred out of discretionary trusts. Legislation has not yet been released and consultation is expected — details can change.
Why does a 30% minimum tax break the family trust model?
The discretionary trust's entire tax logic was streaming: distributing income to beneficiaries on lower marginal rates so the family's blended rate landed well below the top bracket. A 30% floor at the trustee level, even with a credit mechanism for beneficiaries, removes most of that arbitrage — and combined with a diluted CGT discount, the structure that holds a large share of Australian private investment wealth loses both of its engines at once.
What is the three-year restructure rollover?
The Budget proposes time-limited relief — three years — allowing assets to be transferred out of discretionary trusts into other entity types without the usual immediate tax consequences that make restructuring prohibitive. It is the government's own acknowledgement that trust-heavy structures will need to reorganise. For internationally mobile families, the same window in which domestic advisers are moving assets into companies is the window in which the offshore question gets asked seriously.
Are the changes law yet?
No. The trust minimum tax and CGT changes were announced in the May 2026 Budget with start dates of 1 July 2028 and 1 July 2027 respectively; draft legislation had not been released at the time of writing and consultation is expected. The separate Division 296 superannuation tax is already law and applies from 1 July 2026. Families should plan against the announced design but confirm the final rules with Australian advisers before acting.
Where are restructuring Australian families moving investment assets?
Domestically, the early flow is into companies and superannuation up to its own new limits. Internationally, the destinations doing the volume are Singapore and the UAE — and for families with Asian assets or footprint, Singapore's fund structures are the natural landing: a VCC holding the investable portfolio, the 13O/13U exemptions where conditions are met, no capital gains tax, and a treaty network. Cross-border moves live or die on Australian tax residency and exit rules — take advice on both sides before anything moves.