Australian Tax Changes 2026–27 | Family Trusts, SMSFs, Property & Business Owners

There have been so many changes happening across the Australian tax system since Budget night that it can be difficult to keep up. Some changes are already in place, others are coming over the next few years, and a number are still working their way through the legislative process.

So, at Investax, we decided to put together something for everyone.

Whether you are an employee, property investor, business owner, family trust beneficiary or SMSF member, this article brings together some of the more important tax changes and developments in one place.

You don’t need to be a tax expert or read every section. Spend a few minutes going through the areas relevant to you, and hopefully you’ll come away knowing a thing or two that you didn’t know before.

From electric vehicles and car deductions to family trusts, SMSFs, small business tax concessions and superannuation, there has been plenty happening. Let’s take a look at what has changed, what is coming and what may be worth keeping an eye on.

The 30% Minimum Tax on Family Trusts – What Could It Mean for You?

If you have a family trust, this is one of the biggest changes to come out of the 2026 Federal Budget.

The Government proposes to introduce a 30% minimum tax on affected discretionary trusts from 1 July 2028. Treasury has now released draft legislation setting out how the new rules could operate.

Importantly, this does not simply mean every family trust will pay 30% tax on every dollar it earns. The proposed system contains exclusions and different options for existing trust owners.

Option 1 – Keep Your Trust Flexible

You may decide that the flexibility of your family trust is still valuable. Being able to decide each year which beneficiaries receive trust income can be useful as family circumstances change.

You can keep that flexibility under the proposed rules, but the trust may then be subject to the 30% minimum tax regime. This could reduce some of the tax benefit previously available from distributing income to family members on lower marginal tax rates.

That does not necessarily make the trust redundant. Asset protection, succession planning, business ownership and investment flexibility may still be important reasons for retaining it.

Option 2 – Give Up Some Flexibility

Existing discretionary trusts may instead be able to make an Excluded Election Trust (EET) election, where income and capital are distributed in fixed percentages to nominated beneficiaries.

For example, the trust could nominate Mum, Dad and an eligible corporate beneficiary (bucket company) and allocate a fixed percentage to each. If the conditions are met, the trust could remain outside the new 30% minimum tax regime.

The trade-off is flexibility. Once the percentages are set, the trustee generally cannot change the distribution each year depending on the family’s circumstances. This means the EET election would need to be considered carefully.

Option 3 – Restructure the Trust

A third option may be to ask whether the existing trust structure still makes sense.

The draft rules propose a three-year roll-over period from 1 July 2027 to assist eligible taxpayers who choose to restructure out of a discretionary trust into another arrangement.

This could provide an important planning opportunity for trusts holding businesses, property or substantial investment portfolios.

Don’t Rush into a Decision

The important word at this stage is proposed. The legislation remains in draft form and could change before becoming law.

For now, there is generally no reason to rush out and close a family trust. But over the next couple of years, trust owners should start asking a more important question: Why do we have this trust, what benefits is it providing, and will it still be the right structure under the new rules?

The important thing is not to leave that conversation until 30 June 2028.

Small Business Owners – The $20,000 Instant Asset Write-Off Is Now Permanent

For small business owners, there is some welcome certainty around the instant asset write-off.

From 1 July 2026, eligible small businesses with aggregated annual turnover below $10 million can immediately deduct the business-use portion of eligible depreciating assets costing less than $20,000. Importantly, the $20,000 threshold applies per asset, not to your total purchases for the year.

For example, a business could potentially purchase several separate eligible assets costing $15,000 each and claim an immediate deduction for each one, assuming all the requirements are satisfied.

But don’t spend $20,000 simply to get a tax deduction. A deduction only reduces your taxable income; it doesn’t reimburse the purchase price. Buy the asset because the business needs it, and then make sure you claim the tax benefit available.

TPAR Is Not Just for the Building Industry – IT Businesses Take Note

For many years, most business owners associated the Taxable Payments Annual Report (TPAR) with the building and construction industry. If you were a builder paying subcontractors, you knew there was a good chance those payments needed to be reported to the ATO.

However, TPAR reporting extends well beyond the building industry, and one area worth paying particular attention to is information technology (IT) industry.

The ATO applies a broad interpretation to what constitutes an information technology service covering everything from the design, development, and implementation to the ongoing maintenance and support of computer systems and software. If you operate an IT consultancy, software firm, or tech business and engage contractors to provide these services on your behalf, you may have a TPAR reporting obligation.

Another key requirement that catches many businesses off guard is that TPAR obligations apply to overseas contractors as well. Simply because an IT contractor is based offshore or works remotely outside Australia does not exclude them; those payments must still be reported to the ATO.

Major Changes to Salary Packaging Work Expenses from 1 April 2027

If your business allows employees to salary package laptops, phones or other work-related expenses, there is an important change coming from 1 April 2027.

Currently, many work-related expenses can be salary packaged without creating an FBT liability where the relevant exemption or the “otherwise deductible” rule applies.

From 1 April 2027, these concessions will be restricted for salary packaging arrangements.

This can affect:

• Laptops, tablets and mobile phones
• Computer software and tools of trade
• Working-from-home expenses, such as phone and internet costs
• Self-education, certain travel and car expenses

Salary Packaging vs Employer Providing the Item

This is an important distinction.

Salary packaging:

From 1 April 2027, salary packaging these expenses may result in an FBT liability for the employer where no other exemption or concession applies.

Employer provides the item:

Eligible work-related items such as a laptop, phone, software or tools of trade can still qualify for the FBT exemption when provided directly by the employer, outside a salary packaging arrangement, provided the relevant conditions are met.

For business owners, now is a good time to review what employees are currently salary packaging and consider whether some work-related equipment should instead be purchased and provided directly by the business from 1 April 2027.

Using a Bucket Company? Division 7A Could Be Changing Again

If your family trust distributes income to a corporate beneficiary (commonly known as a bucket company) but does not physically pay the money to the company, the unpaid amount is generally referred to as an Unpaid Present Entitlement (UPE).

For many years, the ATO’s position was that a UPE owing to a private company could be treated as a loan for Division 7A purposes.

That position was challenged through the courts in what became known as the Bendel case.

In June 2026, the High Court dismissed the Commissioner’s appeal in Commissioner of Taxation v Bendel. The High Court confirmed that a corporate beneficiary simply leaving its trust entitlement unpaid does not, by itself, amount to a Division 7A loan. (ato.gov.au)

However, that may not be the end of the story.

The Government has now returned to an earlier proposal to specifically bring unpaid present entitlements to corporate beneficiaries within Division 7A. Treasury has been consulting on how this should be implemented and how the rules should interact with the proposed 30% minimum tax on discretionary trusts. (ministers.treasury.gov.au)

This could be particularly important for families that use a bucket company as part of their annual trust distribution strategy. If the proposed changes become law, simply distributing income to a company and leaving the money in the trust may once again require careful Division 7A management.

Important Note – Bendel

Bendel remains an important decision, but trust owners should be careful about making long-term changes to their strategy based on the case alone while the Government is considering legislative changes to UPEs.

Have an SMSF? Your 30 June 2026 Asset Values Could Become Very Important

SMSFs are already required to report their assets at market value each year. However, 30 June 2026 is particularly important because of a one-off opportunity available under the new Division 296 rules.

Eligible SMSFs can choose to reset the cost base of their CGT assets to their market value at 30 June 2026 for Division 296 purposes. In simple terms, this can prevent capital growth that occurred before Division 296 commenced from being included in a future Division 296 calculation when the asset is eventually sold.

For example, if your SMSF purchased a property for $800,000 many years ago and it was worth $1.8 million at 30 June 2026, the fund may be able to use the $1.8 million value as its starting cost base for Division 296 purposes.

This is not something that only SMSFs with members already above $3 million should ignore. A member may currently be below the threshold but move above it in future because of investment growth, contributions or other superannuation interests.

The election applies to all CGT assets held by the fund on 30 June 2026, rather than allowing trustees to choose individual assets, and once made it cannot be revoked. This means assets sitting at an unrealised loss also need to be considered before making the decision.

The good news is that the election does not have to be made as part of the 2026 SMSF tax return. Trustees have until the due date for the fund’s 2026–27 tax return to make the choice.

So, for SMSF trustees, the immediate priority is to make sure the fund’s 30 June 2026 market values are properly supported. The decision about whether to use those values for the Division 296 cost-base reset can then be considered separately.

What Should You Do Next?

There is a common theme running through many of these upcoming changes: the earlier you understand how they affect you, the more options you have.

For Family Trust Owners:

There is no need to rush into restructuring while proposed rules are being finalised, but now is the time to evaluate whether your existing trust structure will continue to suit your family from 2028 onwards.

For Business Owners:

Some changes require immediate attention. Review your asset purchases, contractor reporting arrangements, and employee salary packaging policies so your business isn’t caught off guard by changing rules.

For SMSF Trustees:

Ensure your 30 June 2026 asset values are thoroughly supported by appropriate valuation evidence and properly documented—especially for funds holding property or unlisted assets that have appreciated significantly.

How We Can Help

At Investax, we believe tax planning is most effective before a major transaction or decision takes place, not after.

If you hold a family trust, operate a business, or manage an SMSF and are uncertain about how these developments impact your position, reaching out to your adviser early is key. If you are looking for an accounting partner who can seamlessly handle both your ongoing tax compliance and forward-looking strategy, we welcome you to contact the Investax team to discuss how we can support you.

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The information contained on this page and on this website is provided for general information purposes only. It does not take into account your individual circumstances and should not be relied upon as personal tax, accounting, legal or financial advice.

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