Investors in crosshairs as Greens push to publicly name 1m discretionary trust beneficiaries

Last month, the Albanese government introduced its tax reform package to parliament, after announcing the changes in the May federal budget.

If passed, a 30 per cent minimum tax will apply to distributions of certain discretionary trusts from 1 July 2028, potentially reducing the benefits available to property investors who use trusts to manage rental and sales income.

The government hopes to pass the bill within the next fortnight before parliament finishes for the year, but will require the backing of the Greens, with the Coalition pledging to vote against the reforms.

Greens Treasury spokesperson, Nick McKim, told the AFR that the Greens were demanding that Labor publicly name the 1 million beneficiaries of discretionary trusts in return for their support of the bill.

The masthead said the minor party intended to use its balance of power in the Senate to push for a public register, enabling greater transparency around who receives wealth through trusts.

According to the AFR, around 930,000 people receive distributions from discretionary trusts annually, including approximately 810,000 adults and 120,000 non-filers, including children.

McKim said discretionary trusts were popular among investors for their tax minimisation opportunities, but were usually accessible only to those with the broader financial capacity.

“While we recognise the inconvenience and cost to the segment of small businesses that use trusts and bucket companies and will have to restructure, their use is not linked to better productivity or superior commercial outcomes,” he said.

Last month, the Greens warned that Labor’s bill was watered down and that the government risked losing an opportunity to make Australia's tax system fairer.

"These reforms appeared to be mildly positive when they were first announced, but there is a real risk that Labor’s political cowardice is transforming them into yet another missed opportunity,” McKim said in a statement.

"Australia's tax system is riddled with loopholes that overwhelmingly benefit the wealthiest 1 per cent. Discretionary trusts are one of the ways wealthy people minimise their tax while workers pay more than their share.”

The proposed tax changes could prompt some property investors to reconsider how they hold their assets, particularly where discretionary trusts are used to distribute rental income among family members.

If they need to transfer property from one entity to another, state stamp duty rules may apply.

However, the NSW government has pledged to introduce stamp duty relief for businesses and individuals restructuring their trusts, provided Labor wins the state election next year.

NSW treasurer Daniel Mookhey said the Minns government would legislate a rollover relief scheme allowing discretionary trusts to transition to the federal government’s transitional Excluded Election Trust (EET) arrangement without triggering stamp duty.

The changes would ensure trusts could transition to an EET without incurring stamp duty, removing a potential cost for businesses restructuring to avoid the proposed tax.

The Victorian and Western Australian governments are also considering providing stamp duty relief for discretionary trust restructures ahead of the potential passage of the minimum tax law.

Ahead of the changes being introduced to Parliament, shadow treasurer, Tim Wilson, said some small and family businesses had been told their restructure costs could be up to $50,000.

“Small and family businesses have spent the last four months seeking legal, financial and valuation advice … because our taxaholic Treasurer can’t keep his hand out of the small business till and kick his spending and inflation addiction,” he said.

“With record insolvencies the one thing small business doesn’t need is Jim Chalmers forcing them to pay thousands, and possibly millions, for financial and legal advice, valuations and stamp duty.”