CPA Australia warns 30% trust tax risks unfair burden without stamp duty relief

CPA Australia has warned that the Federal Government’s planned 30% minimum tax on discretionary trusts will not meet its own fairness aims unless state and territory stamp duty barriers are addressed.

The measure, scheduled to begin on 1 July 2028, would offer Commonwealth rollover relief for eligible businesses that move from a discretionary trust into a company, fixed trust or individual structure.

The relief is intended to remove federal income tax and capital gains tax costs on restructures.

CPA Australia said this still leaves a major gap: the impact of state and territory transfer duty, which is not covered by the federal consultation and could leave businesses facing substantial costs.

CPA Australia Tax lead Jenny Wong explained that the consultation before legislation is welcome but warned that the current settings risk loading significant restructuring expenses onto small businesses.

Wong said: “Discretionary trusts are the default starting point for many small businesses in Australia. They are not automatically sophisticated tax plays.”

CPA Australia noted that changing structures typically requires legal and tax advice, revised employment contracts, leases, supplier agreements and finance arrangements, all of which add cost and complexity.

The body is urging the Australian Government to work with state and territory governments through the Council on Federal Financial Relations or National Cabinet before finalising the bill.

It also said the reform timetable is creating additional uncertainty and could hit smaller and regional operators hardest.

CPA Australia also flagged concerns over proposed joint and several liability for directors of corporate trustees, combined with new Australian Taxation Office collection notice powers.

The accounting body said it is not contesting the policy aim of aligning tax treatment of trust income and wages.

Its focus is on making the regime workable, ensuring a fair transition and avoiding penalties for businesses restructuring in good faith.

Last month, CPA Australia backed the government’s tax changes but warned that design flaws could hurt small businesses.