Australia's family trust tax proposal threatens small businesses

• Small Australian businesses face $50,000 restructuring costs due to the Federal Government's proposed tax on discretionary family trusts.
• The Australian Chamber of Commerce and Industry warned that nearly 240,000 small businesses could be impacted by the minimum 30% tax rate.
• Labor defended the proposal as a measure to boost tax fairness, while the Coalition demanded the policy be scrapped entirely.

Small businesses could face restructuring bills exceeding $50,000 under a federal government tax plan targeting discretionary family trusts.

The Australian Chamber of Commerce and Industry stated that the proposed 30 per cent tax rate could affect 240,000 small businesses and raise $45 billion over ten years.

"We can’t have a situation where small business becomes the punching bag of government," said Australian Chamber of Commerce and Industry CEO Andrew McKellar.

Tax lawyer Arda Ahmed warned that trustees breaching or withdrawing from the proposed nomination arrangements could face a 47% tax bill on the net income of the trust.

The proposed policy was first introduced in the May Budget and is scheduled to take effect in July 2028.

Treasury estimates indicate that roughly 350,000 small businesses operated using discretionary trusts during the 2022–23 financial year.