Thinking of using a family trust? What the proposed 2028 changes mean for business owners

Family trusts have been a go-to structure for Australian business owners for decades, mostly because they let you distribute income across family members in a tax-effective way. The government has now announced changes that shift that, so if you've got a trust, or you're thinking about setting one up, here's what you need to know.

What's been announced

From 1 July 2028, the government has announced a minimum 30% tax rate on the income of discretionary trusts. In practical terms, the strategy of distributing trust income to family members on lower tax rates won't save as much as it used to. That's the headline, and for some family groups it's a meaningful change.

Important: this one is not law yet

Unlike the CGT changes, which have passed, the trust measure has only been announced. It's proposed to start in 2028 and hasn't been finalised into law. The detail could still change. So this is absolutely not the moment for rushed decisions or panic-restructuring.

It's not as blunt as it sounds

A few things soften it. Genuine testamentary trusts, the ones set up through a Will, are proposed to be carved out. And the government has announced three years of rollover relief to help business owners restructure out of a discretionary trust into something like a company, without a big tax bill for making the change. So there's a planned pathway and a window, not a cliff.

What it means for you

If your business runs through a family trust, this doesn't mean a trust is suddenly the wrong answer. Trusts still do useful things. But the income-splitting benefit that made them so popular is likely to shrink, so the structure needs to earn its place for other reasons. If you're not sure your current structure still stacks up, that's a conversation worth having, calmly, with plenty of time before any of this starts.

This is exactly the kind of thing we help business owners work through. We'll look at your actual setup and tell you straight whether it still makes sense for where your business is headed.