Australia proposes trust tax workaround for small businesses

The Australian government has proposed a workaround allowing small businesses with discretionary trusts to avoid a new 30 percent minimum tax by keeping their trust distributions fixed, rather than restructuring. The draft legislation was released for feedback on Thursday. The workaround aims to prevent small businesses from triggering state stamp duty fees during restructures, which lobby group COSBOA warned could force an "impossible choice" between higher taxes or costly changes. Trustees can opt into fixed distributions to existing beneficiaries, gaining tax exemption without converting their trust structure. The trust tax, effective mid-2028, includes exemptions for charities, super funds, and farm income. Consultation closes September 18, with business groups also seeking government help for restructuring advice costs.