If you own an investment property through a family trust or discretionary trust, the proposed tax changes from 2028 are worth understanding.
In early September 2026, the Labor Government announced changes to part of its proposed approach to the taxation of discretionary trusts.
The details can become complicated quickly, so here is a simple overview of what has been proposed and why it may matter to property owners.
In the May Budget, Treasurer Jim Chalmers announced that from 1 July 2028, discretionary trusts would face a minimum 30% tax.
Why Does This Matter?
One of the main reasons people use a discretionary trust is the flexibility it provides.
The trustee can decide how income is distributed between beneficiaries. Depending on the trust structure and individual circumstances, this may include parents, adult children or a company.
That flexibility can be valuable because circumstances change over time. Business income changes, families change, children grow up, people retire and succession plans develop.
Under the original proposal, retaining that flexibility could mean being subject to the new minimum 30% tax.
What Has Changed?
The Government has now introduced an additional option for existing discretionary trusts.
Under the proposed changes, a trust may be able to elect to make fixed distributions to pre-nominated beneficiaries. If the trust meets the relevant requirements, it could potentially be exempt from the new 30% minimum tax.
For some property owners, this could mean:
- the existing trust may not need to be closed
- assets may not need to be transferred into another structure
- the election is not expected to trigger state or territory stamp duty, according to the Federal Government
At first glance, this may sound like a significant improvement.
However, there is an important trade-off.
To potentially avoid the 30% minimum tax, the trust may need to give up some of the distribution flexibility that made a discretionary trust attractive in the first place.
In simple terms, you may be able to keep the trust structure, but not necessarily all of the flexibility that came with it.
The 30% Minimum Tax Has Not Been Removed
The important point is that the proposed minimum 30% tax has not been scrapped.
Instead, the Government has introduced another potential pathway.
A trust may either retain its existing flexibility and potentially be affected by the minimum tax, or move towards fixed distributions and potentially qualify for an exemption.
So while the latest proposal provides more flexibility than the original version, it does not completely remove the issue.
For property owners who use discretionary trusts, the detail will matter.
Why Should Property Owners Pay Attention?
Many landlords, investors, developers and business owners hold property through family or discretionary trusts.
As we move closer to 2028, these proposed changes could influence how some owners think about their trust structure, succession planning and future property decisions.
At Centenary Approach, we do not provide tax advice. However, we believe it is useful for property owners to be aware of changes that could potentially affect their investment structure.
If you hold property through a discretionary trust, this may be a good time to speak with your accountant or tax adviser and understand how the proposed changes could apply to your circumstances.
If you would like to discuss the management of your investment property, please contact the Centenary Approach team.
