From 1 July 2028 the trustee will pay tax of 30% on most discretionary trust income. Individual beneficiaries get a non-refundable credit; bucket companies get none. Enter your trust’s income and distribution plan to see who pays more, by how much, and what the best split looks like under each set of rules.
Timeline
12 May 2026
Announced in the 2026-27 Budget; testamentary trust asset cut-off
3 September 2026
Treasury exposure draft released
1 July 2027 – 30 June 2030
Proposed roll-over window to move assets out
1 July 2028
Minimum tax applies (2028-29 income year)
Current rules
Effective rate of net income
Minimum tax rules
Effective rate · trustee pays
Change for this family
Incremental tax caused by the distribution
| Beneficiary | Distribution | Tax now | Trustee 30% | Beneficiary tax | Total new | Change | Effective rate |
|---|---|---|---|---|---|---|---|
|
|
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Trustee (unallocated) s99A at 47% |
– | – | $0 | ||||
| Total | now new |
“Trustee 30%” is the minimum tax attributable to each share, net of franking credits (excess franking is refunded to the trustee). “Beneficiary tax” is the extra personal or company tax after the non-refundable 30% offset. Negative figures are refunds of franking credits. Effective rates are measured on the grossed-up distribution and include company tax already paid on franked dividends.
Lowest-tax allocation under each set of rules
Current rules vs minimum tax, your allocation
Combined tax on of ordinary income vs the beneficiary’s other income
Excluded election trust
Tax at your current split if the trust elects fixed entitlements
Saves a year compared with the minimum tax, but locks the shares for good. Varying a distribution revokes the election and taxes the whole net income at 47% — in a year like this one.
Roll-over and restructure
2027–2030
Proposed CGT roll-over window
All relevant assets must move to a single transferee by 30 June 2030, or relief fails for every asset. Tax is deferred rather than removed, and transfer duty is a state matter. You cannot use both the roll-over and the excluded election.
Bucket company
Combined tax on income distributed to a company
Corporate beneficiaries get no credit for the trustee’s 30%. Commentators estimate total tax of up to about 60% at company level, and more once profits are paid out as dividends. Under current rules it is 30%.
Current rules. Each beneficiary is assessed on their share of trust net income. Capital gains are grossed up: individuals keep the 50% discount and companies do not. Franking credits flow through and are refundable to individuals. Minors under 18 pay Division 6AA rates on unearned income: nil to $416, 66% to $1,307, then 45% on the whole amount. Personal tax includes the low income tax offset and the 2% Medicare levy.
Minimum tax. This follows the exposure draft (new s101AA ITAA 1936). The trustee pays 30% on minimum tax income, which is net income excluding primary production income and amounts going to excluded beneficiaries. Franking credits reduce the trustee’s liability, and any excess is refunded to the trustee. Individual beneficiaries are assessed as normal and receive a non-refundable 30% offset (s101AF). That offset can reduce tax on their other income, but cannot create a refund. Franking credits are not available a second time at beneficiary level (s101AG). Corporate beneficiaries receive no offset.
Assumptions where the draft is silent. CGT interaction rules are deferred to later legislation. This model assumes the discounted gain is part of minimum tax income and that companies are assessed on the grossed-up gain. Minors are treated as excluded because their unearned income is already taxed at top rates. The offset is applied against income tax and the Medicare levy together. There is no carry-forward of unused offsets.
Not modelled. Streaming of capital gains and franked dividends to particular beneficiaries, the vulnerable-minor exclusion, trust losses, PAYG instalments, family trust distribution tax, s100A reimbursement agreements, Division 7A on unpaid present entitlements, and non-resident beneficiaries.
Status. The minimum tax was announced in the 2026-27 Budget and released as exposure draft legislation on 3 September 2026. Consultation closed on 18 September 2026. It is not law, and the final rules may differ. This calculator is general information only and is not tax, legal or financial product advice.
How the new rules work
The trustee pays 30% first. Each beneficiary is then taxed as normal and claims the 30% back as a credit. If a beneficiary’s own rate is above 30%, nothing changes overall. If it is below, the difference is lost. For a bucket company there is no credit at all.
Worked example 1
Worked example 2
Worked example 3
Tenovo models multiple entities, distribution minutes and year-by-year projections, ready to hand to your adviser.