- The Family Business Association is urging the Government to release its economic modelling behind proposed minimum tax reforms on discretionary trusts before the consultation deadline of 18 September, including revenue estimates and the number of businesses affected.
- The Association argues that each revision to the policy has increased complexity rather than reduced it, leaving family business owners navigating multiple options — including fixed-distribution elections, rollovers, and minimum tax — at significant adviser cost.
- Family businesses, which represent around 70% of all Australian businesses and employ 50% of the workforce, rely on discretionary trusts to manage variable income, succession planning, and changes in family members' involvement in the business.
- The Association has raised concern that the draft legislation remains incomplete, with integrity and administration settings yet to be published, making it impossible for family businesses to plan with certainty.
- New trust formations have reportedly collapsed by between 50% and 70% since the Budget, with the Association warning that families are halting activity rather than restructuring — an outcome it says no one intended.
The Family Business Association has called on the Government to publish the modelling behind its minimum tax on discretionary trusts before consultation closes on 18 September, and to open a genuine conversation about simplifying tax for small and family business.
The Association is calling for the Government to release the modelling around the proposed reforms. This would include the revenue estimate for the redrafted measure, the number of businesses expected to be affected, the number expected to elect fixed distributions, and the compliance cost per business.
Each revision to the Government's policy has added another choice, an election, a rollover, or the minimum tax, without reducing the complexity family businesses already face. Family businesses need fewer moving parts, not more.
Family Business Association CEO Catherine Sayer said: "It is good to see the Government has already listened and responded to some of the concerns raised. Family businesses are different, and they are critical to the Australian economy and social fabric. They make up around 70% of all Australian businesses and employ 50% of the workforce. We need to make sure this does not inadvertently cause them grief."
"Every version of this measure has been more complicated than the last. A family business owner now has to weigh a fixed-distribution election, an eligibility test, a rollover, or paying the minimum tax, and then pay an adviser to work out which path they can actually live with."
"Discretion is how family businesses manage a variable year, a succession or a change in which family member is working in the business. An election that locks distribution in place solves one problem but creates another."
"A fairness measure should show who pays, and distributional analysis is how fairness is proven. There are now four paths: pay the minimum tax, lock distributions, restructure, or exit. It is reasonable to ask how many of the 350,000 small business trusts the Government expects on each path."
"Our members are not asking for special treatment. They are asking for a tax system that is simple, workable and fair, and for the Government to show its working before it legislates."
"The draft legislation covers the core rules. Integrity and administration settings are still to come. Family businesses cannot plan with certainty against a measure that is only half written."
Ms Sayer said the collapse in new trust formations since the Budget, reported at between 50 and 70 per cent by trust documentation providers, shows the cost of prolonged uncertainty.
"Families are not restructuring. They are stopping. That is not a policy outcome anyone wanted."
The Family Business Association will lodge a submission on the exposure draft before 18 September.
About us:
Family Business Association (FBA) is the peak body supporting families in business across Australia and New Zealand. Family businesses are central to our economy and our communities, making up around 70 per cent of Australian businesses and employing around 50 per cent of employees.
Contact details:
Catherine Sayer, CEO, Family Business Association
Mob: 0474 473 493
Email: [email protected]
