Division 7A: can you use company money for personal expenses?

Published 2 October 2026 · Stewart Private Accounting

The May 2026 Federal Budget announced a 30% minimum tax on certain discretionary trust income from 1 July 2028. Treasury subsequently released a July consultation paper and September exposure draft legislation. For a family business, the issue is how the proposed rules would affect distributions, cash flow and the reasons for using the trust.

Status at 2 October 2026: this article explains the exposure-draft proposal, not a minimum trust tax already operating. The Treasury draft legislation and explanatory materials were released on 3 September, with consultation closing on 18 September 2026. Final provisions and administrative arrangements may change.

Would every family trust pay 30%?

The draft targets defined minimum-tax trusts and relevant net income, with exclusions. A structure being called a “family trust” does not settle whether it is caught. Review the deed, beneficiary rights, income sources and any exclusions rather than relying on its trading name or a general description.

Under the proposed core arrangements, the trustee would pay the minimum tax. Non-corporate beneficiaries would generally receive a non-refundable offset for the trustee tax attributable to their share. The tax is a floor, so it does not cap a high-income beneficiary’s total tax at 30%. Corporate beneficiaries have different treatment. These mechanics are explained in the draft minimum-tax explanatory materials.

Why does the proposal matter for cash flow?

A trust that currently allocates income to adult beneficiaries on lower marginal rates may lose some of that tax benefit. The trustee would also need cash available to meet its proposed liability, rather than assuming every dollar can be distributed or reinvested.

As a simplified illustration, $100,000 of income wholly subject to a 30% minimum implies a $30,000 minimum tax amount. That is not automatically an additional $30,000 on top of all existing tax. Existing trustee tax, beneficiary offsets, excluded income and credits affect the outcome. Use a forecast based on the trust’s actual income and beneficiaries, rather than multiplying its gross sales by 30%.

Which trusts and income would be excluded?

The September proposal provides exclusions for relevant fixed trusts, complying superannuation entities, special disability trusts and deceased estates. It also provides for excluded income, including qualifying primary production income, certain income relating to vulnerable minors and genuine testamentary trust income. Charitable and other exempt beneficiaries have specific rules.

These exclusions have conditions. A trust earning farming income and investment income should not assume every dollar is exempt. Nor does a unit trust automatically qualify as a fixed trust merely because it has units. The proposed fixed-trust definition looks at the substance of beneficiary entitlements and material discretionary elements.

What is the new fixed-distribution election?

The September draft adds an alternative to restructuring for discretionary trusts in existence at 1 July 2028. A trustee could elect to make fixed distributions to pre-nominated beneficiaries and be excluded from the minimum tax regime. The Treasury exposure-draft factsheet explains the option.

This would exchange distribution flexibility for greater certainty. Changing nominated beneficiaries is restricted, and inconsistent distributions can automatically revoke the election. Treasury’s draft outlines a highest-marginal-rate consequence, including Medicare levy, in the revocation year, followed by minimum-tax treatment in later years. It is therefore not a casual annual switch.

Before considering the election, test what would happen if family members’ incomes, ownership plans or relationships change. Review the draft election explanatory materials alongside the deed.

Would restructuring be tax-free?

Expanded rollover relief is proposed for three years from 1 July 2027 to help taxpayers move out of discretionary trusts, including into companies or fixed trusts. The relief has conditions and is designed around a full restructure, with targeted exceptions. It is not permission to move selected assets to family members without consequences.

Income tax rollover relief does not automatically remove state transfer duty, lender consent, legal costs or commercial obligations. For a Perth business or property owner, obtain a separate Western Australian duty assessment and legal review before transferring assets. Compare staying in the trust, an eligible election and a restructure using the same income and cash-flow assumptions.

How does this interact with CGT and company beneficiaries?

The CGT reforms from 1 July 2027 are a separate measure with an earlier start date. A trust restructure can raise both sets of questions. Treasury has also indicated that legislation concerning unpaid present entitlements and Division 7A will be progressed separately; distributing income to a company should not be treated as an automatic solution. See the September Treasury announcement.

What should trustees prepare now?

• The current trust deed and every amendment.
• Recent tax returns, accounts and distribution resolutions.
• Asset ownership, cost-base and loan records.
• Beneficiary balances, company entitlements and cash payments.
• A forecast of business, investment and excluded income.
• The family’s succession, asset-protection and funding objectives.

Continue meeting current distribution and reporting obligations while planning for the proposal. Our trust tax return guide covers existing records and deadlines. Discuss a trust planning review with Stewart Private Accounting so the options can be assessed against your circumstances and the legislation available at that time.

General information checked at 2 October 2026. Future law, eligibility and your circumstances can change the result. Obtain tax and legal advice before selling assets, amending a deed or restructuring.

Published 2 October 2026 · Stewart Private Accounting

The May 2026 Federal Budget announced major changes to capital gains tax. The core reform is now legislated, with new arrangements applying from 1 July 2027. For business owners and investors, the practical questions are which assets are affected, how earlier gains are treated and what records will support the calculation.

Status at 2 October 2026: the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 has passed. Further implementation details have been released through Treasury’s second-stage consultation. Do not assume every detail in a consultation draft is enacted.

What happens to the 50% CGT discount?

For affected gains accruing from 1 July 2027, the general 50% discount is replaced by cost-base indexation, subject to the rules and exceptions. Indexation adjusts the eligible cost base for inflation, so the calculation focuses on the real gain. The reform affects more than residential property: shares and other investments held by individuals and through relevant trusts can also be affected.

This is not a change that gives every company a new CGT discount. The entity holding the asset, the holding period, residency and available exemptions remain important. The Budget’s CGT and negative gearing explainer outlines the policy and examples.

Does “30% minimum tax” mean a flat 30% rate?

No. It is a minimum for relevant capital gains, rather than a cap. A person already paying tax above that rate does not automatically get their rate reduced to 30%. The legislation includes a calculation for any extra tax and exceptions for recipients of specified support payments. Eligibility depends on the actual payment received; being retired alone is not the test.

The minimum applies to the relevant taxable gain after the applicable adjustments, rather than to the asset’s sale proceeds. A $500,000 sale does not mean $150,000 of tax without considering the cost base, losses, exemptions and other requirements.

Are gains built up before 1 July 2027 protected?

The transitional arrangements separate the period before 1 July 2027 from the later period. Earlier gains can retain their existing treatment where the conditions are met. Holding an asset before Budget night does not, however, protect every future gain indefinitely.

For illustration, an investor bought an asset for $300,000, it is worth $420,000 at the transition date and it later sells for $500,000. Those figures identify two periods of growth: $120,000 before the transition and $80,000 afterwards, before indexation and other adjustments. This is a planning illustration, not a tax calculation or confirmation of the valuation method available for that asset.

Retain purchase documents, improvement costs, ownership history and evidence relevant to a transition-date value. Treasury’s second-stage materials address apportionment and special situations. Ask which records and valuation approach suit your asset before arranging a sale.

What about the main residence and new residential dwellings?

The main residence exemption remains, subject to its existing conditions. It is not a blanket exemption for a home used for business or rental purposes. Eligible new residential dwellings have special arrangements that can preserve access to the 50% discount. A property’s marketing label is not enough to establish eligibility.

Negative gearing is a separate reform with different transitional tests. In particular, its Budget-night acquisition rules should not be confused with the 1 July 2027 CGT transition.

Are small business CGT concessions disappearing?

No. The small business CGT concessions remain important. The general 50% CGT discount and the small business 50% active asset reduction are different concessions. The enacted amendments expand access to the active asset reduction by removing the specific $2 million turnover restriction for that concession; other conditions still need checking. Do not assume the same change applies to every small business CGT concession.

A business sale therefore needs an asset-by-asset and entity-by-entity review, including ownership, active use, shares or units, and the relevant concession conditions. The Treasury small business explainer gives additional context.

What should you do now?

• List investments and business assets, with acquisition dates and owners.
• Reconcile cost-base records and carried-forward capital losses.
• Identify proposed sales and the reasons for their timing.
• Review concession eligibility before negotiating a business sale.
• Model the CGT result separately from any proposed trust restructure.

Read our companion guide to the proposed discretionary trust minimum tax. Stewart Private Accounting can help assess the tax consequences through our tax planning services. Contact our Perth team with your asset and ownership records.

General information checked at 2 October 2026. Future law, eligibility and your circumstances can change the result. Obtain tax and legal advice before selling assets, amending a deed or restructuring.

Published 2 October 2026 · Stewart Private Accounting

The $20,000 instant asset write-off is permanent from 1 July 2026 for eligible small businesses using simplified depreciation. It can bring forward a deduction for equipment, tools or other qualifying assets. It does not reimburse the purchase price, and spending money solely to obtain a deduction can weaken your cash flow.

The change is enacted in Schedule 2 of the Treasury Laws Amendment (Tax Reform No. 2) Act 2026. The ATO’s current small business guidance explains the eligibility requirements.

Which businesses and assets qualify?

You generally need to carry on a business, have aggregated annual turnover below $10 million and use the simplified depreciation rules. Aggregated turnover can include relevant connected businesses and affiliates, so the sales shown in one entity’s accounts may not be the whole test.

The asset must qualify under those rules, cost less than $20,000, and be first used or installed ready for use in the relevant income year. Both new and second-hand assets can qualify. The limit applies per asset, rather than as a single $20,000 allowance for all purchases. Assets excluded from simplified depreciation require a different analysis.

Does an asset costing exactly $20,000 qualify?

No. The wording is less than $20,000, after applying the relevant GST treatment. An asset costing $20,000 or more is generally allocated to the small business pool if the simplified rules apply. Reducing the claim for private use does not reduce the asset’s full cost for the threshold test. See the ATO’s asset write-off rules and examples.

For illustration, a $24,000 asset used 50% for business does not become an eligible $12,000 asset. Test its full cost first, then determine the deductible business portion under the applicable depreciation rules.

How does GST affect the calculation?

If you can claim a full GST credit, exclude that GST from the cost used for depreciation. If you are not GST-registered, GST generally remains part of the cost. Partial credit entitlement requires a separate calculation.

Suppose an eligible business purchases equipment for $19,800 including GST, claims the full $1,800 GST credit and uses it entirely for business. Its depreciation cost is $18,000. If the other requirements are met and it is ready for use during 2026–27, the immediate income tax deduction is $18,000. The GST credit and income tax deduction are different claims.

Is paying a deposit before 30 June enough?

No. Payment alone does not establish the year of deduction. Delivery, installation and readiness for use matter. Equipment paid for in June but not installed ready for use until July can fall into the next income year. Keep evidence of the actual dates instead of relying only on a bank transaction.

What does a deduction save?

A deduction reduces taxable income; it is not a dollar-for-dollar refund. As a simple illustration, an $18,000 deduction at an assumed 25% tax rate reduces tax by $4,500. That assumes sufficient taxable income and that the 25% rate applies. The business still funds the purchase, and losses or a different rate change the outcome.

What should you check before ordering?

• Confirm the operational need and available cash.
• Check aggregated turnover and your depreciation method.
• Obtain the full asset price and GST details.
• Document business use and installation timing.
• Check exclusions, vehicle rules, finance arrangements and any trade-in.

Bring the quote, invoice, finance documents and intended use to a review. Our tax planning services can help assess the deduction alongside cash flow. Discuss the purchase with Stewart Private Accounting before committing.

General information current at 2 October 2026. Your business structure, transactions and circumstances affect the outcome. Obtain advice before acting.