In this article
Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The Tax Institute lodged its submission on the proposed minimum tax for discretionary trusts on 18 September 2026, the day consultation closed. The professional body supports the aim of the reform, which it calls long overdue, but its submission sets out a long list of places where the exposure drafts released on 3 September would produce costs the policy does not intend. Several of them fall on trusts that hold land, and three are of direct interest to Queensland property owners: State transfer duty, GST and the cost of restructuring itself.
The submission also objects to the timetable. Stakeholders were given 16 calendar days to respond to what the Institute describes as "arguably one of the most significant changes to our tax system in decades".
The Tax Institute, submission dated 18 September 2026; Queensland Revenue Office transfer duty rates page for the duty example.
What the submission responds to
The drafts propose that, from 1 July 2028, a trustee of a discretionary trust tops up the tax on the trust's income to a minimum of 30 per cent. A trust that does not want to be in that position has two alternatives. It can restructure into a company or a fixed structure, with capital gains roll-over relief available for transfers made between 1 July 2027 and 30 June 2030. Or it can elect, in the 2028-29 income year, to become what the drafts call an excluded election trust, nominating its beneficiaries and their fixed percentages once and distributing on that basis every year afterwards.
The Institute's submission accepts the architecture and tests each part of it against the situations its members see. Its conclusion on process is that the short consultation limits anyone's ability to find unintended consequences, and that the administrative rules, which the draft explanatory material says will come in later legislation, should be published before trustees have to choose.
Related readBrisbane lifts rates 3.97 per cent, the lowest rise announced so farState duty: relief in one place, a bill in another
The roll-over relief is a federal concession, and the drafts say so. The Institute points to the provision confirming that the roll-over does not affect liabilities under other laws, so that State and Territory taxes apply in the ordinary way. Its own description of the result is a restructure that is relieved of capital gains tax at the Commonwealth level and, in many cases, subject to full transfer duty at the State level.
In Queensland the size of that bill can be read off the Revenue Office's scale. A transfer of investment property is dutiable at standard rates, and the office's own example puts duty on an $850,000 investment property at $31,275. A trust with several properties would pay on each.
The Institute's recommendation is coordination. It asks the federal government to work with the States and Territories, and to consider pairing the Commonwealth roll-over with State duty relief. That is a request and not a prediction: duty is a State tax, and the submission does not suggest that any State has offered relief.
| Cost | Level of government | Position under the drafts |
|---|---|---|
| Capital gains tax | Commonwealth | Roll-over relief, 1 July 2027 to 30 June 2030 |
| Transfer duty | State | Applies in the ordinary way |
| GST on the transfer | Commonwealth | Not addressed; depends on existing rules |
| Legal, accounting and valuation fees | Private cost | No clear deduction for a trust without a business |
The Tax Institute, submission on the minimum tax on discretionary trusts exposure draft legislation, 18 September 2026.
Is the election itself free of duty?
The fixed-share election was offered as the answer to the duty problem. The Treasurer's release of 3 September said it would let a trust qualify without restructuring costs or expected stamp duties. The Institute's submission treats that as likely but not settled.
It reports that published professional commentary is already divided on whether making the election and distributing in line with the nomination amounts to a dutiable change in beneficial ownership, naming New South Wales, Victoria and Queensland as jurisdictions where the question arises. The Institute's own view is that the election does not alter anyone's interest in the trust property: the trustee still has a discretion in law, and departing from the nomination has a tax consequence without being a breach of trust. It adds that the position is not free from doubt, because State revenue offices administer their own duties Acts and are not bound by what a Commonwealth explanatory document says.
Related readNew capital gains rules are now law, and the family home stays exemptA related risk concerns trustees who try a third course and simply amend the trust deed to remove its discretionary features. The Institute says such an amendment could be treated as a resettlement, creating in effect a new trust, with capital gains tax and State duty consequences and no relief at all, and that neither set of explanatory material deals with that path.
Its recommendations are that the law or its explanatory material state expressly that the election changes no equitable interests, and that the Commonwealth seek confirmation from the States, through the Council on Federal Financial Relations, that neither the election nor the nomination will be treated as a dutiable transaction.
GST and restructuring costs
Two further costs are raised that have had little public attention.
The first is GST. A transfer of assets from a trustee to a company is a supply between two different entities. The usual way to keep GST out of a restructure is the going concern concession, which has strict conditions: everything needed to continue the enterprise must be supplied, both parties must be registered or required to be, and they must agree in writing. The Institute says many restructures will not meet those tests, particularly where a trust holds passive investments instead of an operating business, or where only some assets move in a given year. It describes the result as an unaddressed cash-flow cost on a transaction driven by a change in Commonwealth law.
The scale of that concern depends on what the trust owns. The Australian Taxation Office's guidance on property says a sale of existing residential premises is input taxed, meaning no GST is charged on it, while commercial property is taxable. The GST question is therefore sharpest for trusts holding shops, offices, sheds and other commercial premises.
Related readCapital gains tax when you sell: the main residence exemption's limitsThe second is the cost of the exercise. Legal, accounting and valuation fees are ordinarily written off over five years under a general provision for business-related capital expenditure, but that provision requires a business. The Institute observes that the roll-over is expressly open to trusts holding passive investments, and that such a trust has no clear path to any deduction for costs it incurs only because the law has changed. It asks for a specific deduction.
Rigid rules for the roll-over and the election
The submission also argues that the roll-over is too rigid for real families.
Relief is built around one trust transferring to one recipient. The Institute gives the example of a family trust that holds both a business and a portfolio of investment properties, where one adult child works in the business and another manages the properties. The sensible outcome is two entities with different owners. The drafts do not allow it within the relief.
All the required assets must also move within the three-year window. The Institute notes that a trustee who starts and does not finish risks having relief already claimed in earlier years reversed, so that nobody can be sure in the first year that the roll-over will still stand in the third. It recommends relief on an asset-by-asset basis, or protection for trustees who make genuine progress.
On the fixed-share election, the Institute's concern is proportion.
The nomination must give each beneficiary the same percentage of capital as of income, which it says many trust deeds do not support. The election can be made only for the 2028-29 income year, with a deadline that could be as early as 31 October 2029, and cannot be made at all once a roll-over has been chosen. The nomination can be varied only on a beneficiary's death or a relationship breakdown; the birth of a child, a marriage or a beneficiary's bankruptcy are not grounds.
Related readCouncil rates in Queensland: how the bill is built and how to objectA breach, however small, ends the election. The submission works through a trust with two children nominated at 50 per cent each, where a rounding error produces a split of 49 and 51. The election is revoked, the trustee is assessed on the whole year's income at the top marginal rate plus the Medicare levy, 47 per cent, and the trust can never elect again. The Institute asks for a proportionate response to minor and inadvertent errors.
These are submissions on a draft, not the law
The minimum tax and both alternatives are proposals. The Tax Institute's points describe how the exposure drafts would work if enacted unchanged; Treasury may revise them before a bill reaches Parliament.
Farm land leased within the family
One example in the submission describes a structure familiar on family farms. A discretionary trust owns the farm land and leases it to a related company or partnership that runs the farming business.
The government has said primary production income is excluded from the minimum tax. The Institute points out that rent is not income from carrying on a primary production business, even when the tenant is the family's own farming entity. In its worked example, a land trust receiving $200,000 a year in rent would face a minimum tax of $60,000, which is 30 per cent, on income that comes entirely from land used for primary production. It recommends a look-through rule of the kind the tax law already uses for the small business capital gains concessions.
What happens next
Consultation has closed. Treasury now considers the submissions, and the drafts' own explanatory material says further legislation will deal with administration, reporting, residency, capital gains and international issues. The Institute wants that further tranche released before the roll-over window opens on 1 July 2027.
For Queensland trustees who hold property, the submission is useful less for its recommendations, which may or may not be adopted, than for its map of the costs. Federal relief covers one of four. The State duty question, on both a restructure and the election, will be answered in Brisbane and not in Canberra, and the submission records no answer yet from any State revenue office.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
