What are the proposed Australian budget tax changes affecting charities and trusts?

The Albanese government has proposed two major tax changes: a 30 per cent minimum tax on discretionary trust distributions set for July 2028, and newly introduced capital gains tax (CGT) legislation.

Why are Australian religious leaders opposing the new discretionary trust tax?

Nineteen senior leaders from Christian, Catholic, Muslim, and Hindu organisations have jointly written to Treasurer Jim Chalmers to warn that the policy will severely cut funding. Because the 30 per cent tax is applied directly to a discretionary trust before any funds are distributed, the financial capacity to support beneficiaries is reduced.

How does the proposed 30 per cent trust tax impact local community groups and sports clubs?

While registered charities are technically exempt from income tax, the discretionary trusts that fund them are not. Many family businesses and wealthy individuals use these trusts to stream tax-free income to local sports clubs, schools, and small community groups that lack official Deductible Gift Recipient (DGR) status.

What is the specific issue with the new capital gains tax (CGT) legislation for non-profits?

The rushed CGT legislation introduces a minimum 30% tax on real capital gains, including those donated directly to major charities like The Salvation Army and Foodbank Australia. Previously, wealthy philanthropists could use a 50% discount to pay personal tax on half the gain and donate the rest tax-free while claiming a deduction.

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Religious leaders warn Albanese of $3B tax git

Written by Liezl GambePublished Jun. 8 2026Last Updated Jun. 8 2026

Australia’s most senior religious leaders have joined forces to warn the Albanese government that proposed budget tax measures could wipe out an estimated $3 billion in donations to the not-for-profit sector, jeopardising federal goals to double philanthropic giving by 2030.

Nineteen leaders representing Christian, Catholic, Muslim, and Hindu organisations — including the Anglican and Catholic Archbishops of Sydney — have jointly written to Treasurer Jim Chalmers.

The group expressed deep concern over a flagged 30% minimum tax on discretionary trusts, set to commence in July 2028.

While Dr Chalmers stated during question time that charities remain income tax-exempt, sector experts argue the policy misses the point.

Because the 30% tax is applied directly to the trust before distribution, regular income streams to community groups, schools, and sports clubs are projected to fall by $2.98 billion over five years.

Simultaneously, philanthropy advisers have sounded alarms over newly introduced capital gains tax legislation, warning it will inadvertently penalise wealthy donors who gift large capital gains to major charities like The Salvation Army and Foodbank.

Under the changes, these donated gains will face a minimum 30% tax, effectively unwinding traditional deductions.

A spokesman for the Treasurer stated that details remain subject to ongoing consultation with the non-profit sector.

However, with the government pushing for a rapid two-day Senate enquiry to pass the legislation before the winter parliamentary break, critics and the coalition argue the rushed timeframe leaves community organisations facing devastating, unintended financial consequences.