TITLE: Trust Tax Bills Face Senate Scrutiny as Farm Groups and Accounting Bodies Call for Clarity
Track the bills as they move through the Senate
The Senate Economics Legislation Committee’s first public hearing examined the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 and the Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026. The bills had cleared the House but remained before the Senate; the proposed 30% minimum tax is not yet law.
This is the next stage in the bills’ path through Parliament, following the House vote covered in our earlier Australia tax update. The committee report is due on 13 November. The Senate vote is expected in the third week of November.
Protect the primary production exemption, says the farmers’ federation
National Farmers’ Federation (NFF) CEO Mike Guerin told senators that the proposed exemption for primary production income must be retained. The NFF says around 37,000 discretionary trusts are used across agriculture, fisheries and forestry, and as many as one in two farm businesses may use this structure.
The NFF also cited ATO data showing that in 2023–24, 99% of discretionary trusts used by family farms were small or micro entities, or reported nil income or a loss. Farm income can fluctuate with seasons, natural disasters and market conditions. The federation says trusts can support family ownership, succession planning, asset protection and investment over time.
But the proposed exemption applies to primary production income, not to farmers as a group. Income from activities such as agritourism, renewable energy, value-adding, infrastructure arrangements or environmental markets may still be subject to the minimum tax. The NFF is calling for clear guidance, proportionate compliance requirements and workable rules for farms with mixed income or complex structures. Read its opening statement to the hearing.
Ask for the complete rules before making choices
The Tax Institute urged the committee not to pass Schedules 1 to 3 of the Tax Reform No. 3 Bill until deferred rules, regulations and legislative instruments are published for consultation. Julie Abdalla, its Head of Tax & Legal, said trustees may be asked to restructure or elect into a new regime, sometimes irreversibly, before they can see the complete rules. The proposed roll-over window opens on 1 July 2027.
One concern is that administration and collection rules for the minimum tax are left to future legislation. The Institute says even how trustee tax interacts with beneficiaries’ entitlements is not addressed in the Bill or its explanatory memorandum.
It also highlighted the short consultation periods: 12 business days for the exposure draft and 10 business days for Senate submissions. The Impact Analysis estimates one-off implementation costs of $939 million and ongoing costs of $48 million a year, excluding state and territory duties. The Institute considers those estimates may understate the true cost.
Other technical concerns include corporate beneficiaries’ inability to claim the minimum tax offset, which it says could produce combined tax of 60% on retained income and around 70% to 77% when income is paid as a dividend to a top-rate shareholder. It also warns that the proposed all-or-nothing roll-over could be unwound across every transferred asset if a breach affects just one asset. See the Institute’s full account of its concerns.
Allow businesses time to prepare, CA ANZ says
Chartered Accountants Australia and New Zealand (CA ANZ) supports the objective of addressing inappropriate income splitting but says important policy and implementation questions remain unresolved. These include uncertainty around not-for-profit exclusions and eligibility for excluded election trust status, as well as how the minimum tax will interact with capital gains tax, residency rules and international tax arrangements.
Damian Ogden, Group Executive Advocacy, International and Government Affairs, warned that businesses using trusts for legitimate commercial purposes could feel pushed to restructure to avoid double taxation. Susan Franks, Tax, Superannuation and Financial Services Leader, said that without clarity, confusion, errors and unnecessary compliance costs become more likely. CA ANZ wants realistic timeframes so taxpayers can review final legislation and ATO guidance, update systems and make informed decisions. Its hearing statement sets out its position.
Prepare carefully while the rules are pending
The debate is not simply about whether trust reform should happen. The Australian Council of Trade Unions has urged the Senate to pass the minimum tax, telling the inquiry that a nurse on an average full-time salary of $90,000 could pay up to $10,000 more tax than a household receiving the same income through a discretionary trust. The committee is weighing those fairness arguments alongside concerns about exemptions, complexity and implementation.
If your family business, e-commerce brand, medical practice or other SME uses a discretionary trust, take these practical steps:
- Map your current structure and income sources. This will help you identify where mixed income may need attention.
- Keep trust, beneficiary and transaction records current. Good records make it easier to assess final requirements and support accurate reporting.
- Track the committee report due 13 November. It may clarify what senators want changed before the expected vote.
- Avoid irreversible restructuring or elections based only on proposed rules. Wait for the final legislation and supporting guidance so you can assess the actual requirements.
The proposed roll-over window is scheduled to open on 1 July 2027, with the minimum tax proposed to apply from 1 July 2028. Keep those dates in view, but check the final legislation before changing your compliance processes.
What happened at the Senate hearing on the trust tax bills?
The committee held a public hearing in Canberra on 5 November 2026 on the Tax Reform No. 3 Bill and the Minimum Tax on Discretionary Trusts Bill. The NFF defended the primary production exemption, while The Tax Institute and CA ANZ called for greater certainty on the rules and implementation.
Why does the National Farmers’ Federation support the trust tax exemption?
The NFF says around 37,000 trusts are used across agriculture, fisheries and forestry, and as many as one in two farm businesses may use one. It cited 2023–24 data showing 99% of family-farm trusts were small or micro entities, or had nil income or a loss. The proposed exemption is for primary production income, not farmers as a group.