October Tax & Accounting Update
Topics Covered
The proposed 30% minimum tax on Discretionary Trusts
Treasury has released the draft legislation for the proposed 30% minimum tax on discretionary trusts, set to start on 1 July 2028.
If you hold assets or run a business through a discretionary trust, the rules of the game are changing. This draft gives us the clearest picture yet of how your structure will be affected—and how you can protect your wealth:
The 30% Minimum Tax: The draft outlines exactly how your trust's income will be taxed and the few narrow exclusions available.
Your 3-Year Exit Window: A limited roll-over relief window opens on 1 July 2027. This allows you to restructure your assets out of a discretionary trust and into a different entity tax-free.
The "Lock-In" Alternative: You can completely avoid the 30% tax by opting into a strict new election regime. This locks you into distributing fixed percentages to nominated beneficiaries—but breaking this rule triggers penalty tax rates.
Refundable Franking Credits: If your trust is hit with the minimum tax, any excess franking credits will only be refundable directly to the trustee.
The UPE Crackdown: The Government also plans to pull your existing Unpaid Present Entitlements (UPEs) into the Division 7A net, effectively reversing the landmark Bendel High Court decision.
The Bottom Line:
While this is still in draft form, the countdown has started. Let’s review your specific trust structure now so we can map out a transition strategy well before the 2027 restructuring window opens.
Contact our office to schedule a meeting.
Stayed tuned – we will keep you updated ahead of it’s rollout in 2028.
Research and Development reforms
Treasury has released exposure draft legislation relating to proposed reforms to the research and development tax incentive (R&DTI) from 1 July 2028.
The reforms propose to:
Increase offsets for eligible core R&D activities and remove the eligibility of supporting R&D activities
Reduce the intensity threshold for the nonrefundable offset to 1.5%
Increase the turnover threshold for the refundable offset to $50 million
Increase the minimum expenditure threshold to $50,000
Increase the maximum expenditure threshold to $200 million
Limit refundability to firms up to 10 years of age, with an extension for up to 15 years for eligible firms undertaking R&D activities related to therapeutic goods (e.g. biotechnology and medical technology).
Capital Gains Tax concession
Treasury has released exposure draft legislation on the proposed innovative business CGT concession (IBCC) to provide a 50% discount on capital gains from eligible early-stage investments in innovative start-ups.
The IBCC would apply to eligible shares issued by qualifying innovative businesses, with the draft legislation reducing the minimum holding period to three years and extending the eligibility period to 15 years for all qualifying businesses. The previous proposed lifetime cap has also been removed.
Eligible individuals, partnerships and trusts would have a choice between applying the 50% IBCC discount or the cost-base indexation method and associated 30% minimum tax rules.
The proposed concession is intended to apply from 1 July 2027, alongside the broader changes to the CGT regime.
Using a Credit Card to pay the ATO
The ATO has announced it will stop accepting direct credit card payments. Originally set for November this year, now extended cutoff to 30 June 2027.
The decision was made in order to avoid passing merchant fees on to the community, the ATO secured transitional government funding to give taxpayers more time to adjust. If you have direct debits or payment plans linked to a credit card, you will need to switch to alternative payment methods before the new deadline. After June 2027, any taxpayers wishing to still use a credit card will have to go through third-party payment processors.
If any of the above raises questions for you or your business, please contact our office.
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