The 2026-27 Budget that introduced the 30% minimum tax on discretionary trusts also opened a 3-year window for trust holders to restructure into a company or fixed trust without triggering CGT or income-tax consequences. The rollover starts 1 July 2027 and runs to 30 June 2030 (Treasury, Budget 2026-27 tax-reform page). This post walks through who it helps, who it doesn't, and the decision sequence between now and 1 July 2028.
What the rollover does
Moving assets out of a discretionary trust normally crystallises CGT on the trust's holdings — the trustee disposes of the asset to the new entity, gain is realised, tax is payable. The rollover suspends that consequence for a defined period.
For three years from 1 July 2027, a discretionary trust can transfer its assets into a company or fixed trust without:
- Income tax on the disposal
- Capital gains tax on the disposal
- (Likely) GST or stamp-duty implications where the existing rollover-relief frameworks already extend — TBD in the legislation
The cost base of the assets transfers across to the new entity. Future disposals from the new entity attract tax on the gain calculated from the original acquisition cost — the rollover defers tax, it doesn't forgive it.
Why the window exists
Treasury announced the rollover alongside the 30% minimum trust tax (effective 1 July 2028 — see our trust 30% minimum tax post). The logic: the new minimum tax changes the cost-benefit of running a discretionary trust. Some families will find a company structure cheaper and simpler. Forcing them to pay full CGT to make that move would entrench the old structure and defeat the policy purpose.
The 3-year window is deliberately bracketing the 30% minimum trust tax start date (1 July 2028) — opens a year before, closes two years after — giving families enough time to plan and execute the restructure without rushing into a poor decision.
Who should consider using it
High-priority candidates
- Trusts streaming to low-rate beneficiaries — adult children at university, low-income spouses. The 30% minimum bites hardest here.
- Trusts with corporate beneficiaries already in the structure — the restructure may consolidate operations into one company, simplify reporting, and capture imputation more cleanly.
- Operating businesses sitting in a discretionary trust — companies pay the corporate rate (25% base rate or 30% standard) regardless of beneficiary marginal rates, so moving an active business into a company is often already neutral or beneficial.
Probably stay put
- Trusts with all beneficiaries above 30% — minimum doesn't bite; status quo costs nothing extra.
- Trusts holding the family home or principal-residence-adjacent property — CGT main-residence rules don't apply to trusts anyway; restructure rationale is different.
- Testamentary trusts — separate regime under s 102AG ITAA 1936; the Budget didn't address them and we expect carve-outs in drafting.
Decision sequence
1. Model the 30% impact on your group
For each of the last three years, what was the family group's actual effective tax rate on trust income? If it was above 30% already, the minimum doesn't change much. If it averaged below 30%, the gap is real and the rollover becomes more attractive.
2. Choose the destination structure
Company is the most common landing. Other options include a fixed trust (rare, more complex), or unit trust where multiple families share an asset. The right answer depends on succession plans, profit-distribution flexibility, and the asset mix.
3. Plan the execution window
The rollover opens 1 July 2027 — eight months before the 30% trust tax begins. Most clients will want to execute in the FY28 first half so the new structure is bedded in before the new tax era. Late executions (FY29 or FY30) work but mean a year or two of the 30% minimum hitting first.
4. Watch for stamp duty
Federal rollover relief addresses income tax and CGT. Stamp duty is state-based and has its own rollover frameworks (different in NSW, VIC, QLD etc). Real property transferring from trust to company may attract duty unless a state rollover applies. Run this past us and your conveyancer for assets located in each state.
What to do now
Nothing immediately, unless your family group's analysis is straightforwardly "below 30% beneficiaries" — in which case start the structural review now so you're ready to execute when the rollover opens in 14 months. Bring three years of trust distribution minutes, the trust deed, and a list of underlying assets. We'll model the 30% impact, propose the destination structure, and stage the execution timeline.
Sources
- Budget 2026-27 tax reform page (budget.gov.au/content/04-tax-reform.htm)
- Treasurer's 2026-27 Budget speech (ministers.treasury.gov.au)
- ATO — Tax reform: introducing a minimum tax on discretionary trusts (ato.gov.au)
- Pitcher Partners technical note — Minimum tax on discretionary trusts
