May 2026 Budget CGT changes: what business owners and investors need to know

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

If you operate through a private company, using its money for personal bills can create a tax problem even when you call the transaction a loan. Division 7A can treat certain payments, loans and forgiven debts involving shareholders or their associates as unfranked dividends. A regular review of owner transactions is more useful than trying to resolve a year’s drawings just before lodgment.

Why is company money different from sole trader drawings?

Your company is a separate entity. Being its director or shareholder does not make its bank account your personal account. Recording a private purchase as a business expense does not make it deductible or remove any Division 7A consequences. The ATO outlines the rules in Private company benefits – Division 7A dividends.

Division 7A is not a rule that every director transfer automatically breaches. The recipient, nature of the transaction, exceptions and company circumstances must be assessed. For example, a genuine repayment of money the company already owes you is different from a new advance by the company.

What transactions should you flag?

• Transfers from the company account to a personal account.
• Private mortgage, school-fee or holiday payments made by the company.
• Private costs on the company credit card.
• Loans to shareholders, family members or other associates.
• Use of company assets or a decision to forgive a related debt.

Keep the transaction visible in the records. Do not hide it in a general expenses account or assume a year-end journal will fix it.

What is the deadline for a new company loan?

A loan potentially caught by Division 7A generally needs to be repaid in full or placed on complying terms before the company’s lodgment day. That is the earlier of its tax return due date and the date it actually lodges. Early lodgment can therefore bring the deadline forward.

A complying written agreement must meet the relevant interest and term requirements. The usual maximum term is seven years, with a 25-year term available only where the specific registered real-property mortgage conditions are met. Do not assume that labelling an account “director loan” creates an agreement. The ATO’s Division 7A guidance on company loans explains the requirements.

Does an agreement remove the need for repayments?

No. Complying loans require minimum yearly repayments in subsequent income years, using the applicable annual benchmark interest rate. For a standard 30 June balancing business, those repayments need attention before 30 June, rather than the later tax return date. The ATO’s Division 7A calculator can assist with the calculation using the loan’s actual details.

Repaying a loan and then borrowing back from the company can cause the repayment to be disregarded. A paper entry without a genuine transaction may also fail. The ATO identifies these issues in its common Division 7A errors guidance.

A practical example

Imagine a shareholder uses $15,000 from their company for private expenses during 2025–26 and the balance remains owing. The accountant needs to examine the transactions and the company’s lodgment day before deciding whether repayment, a complying loan or another properly documented treatment is appropriate. If a complying loan is established, future interest and minimum repayments must also be managed. This illustration does not assume an automatic $15,000 dividend: exceptions and the company’s distributable surplus can affect the result.

What should you bring to a review?

Prepare company and personal transaction records, the loan ledger, existing agreements, repayment evidence and the tax return due date. Tell your accountant if you plan to lodge early. Salary, dividends, expense reimbursements and loan repayments each need their own correct treatment.

Our company accounting services and tax planning services can help identify owner balances and the actions needed. Contact Stewart Private Accounting before withdrawing company funds or finalising the return.

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

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.