CPA Australia warns on resurrecting ALP’s 2019 tax package

Mike Taylor

Managing Editor and Publisher

6 May 2026

Just a week out from the Federal Budget major accounting group CPA Australia has made clear its strong opposition to suggestions the Government intends imposing a 30% minimum tax on trust distributions.

The accounting group has labelled such a measure as a “revenue grab” and called on the Government to release full design details and to initiate consultation with the tax profession.

It said a 30% minimum tax on trust distributions represents a blunt measures that will materially affect small businesses and families while creating uncertainty just days out from the tabling of the Budget.

CPA Australia Tax Lead, Jenny Wong said the timing was already fuelling anxiety and speculation among businesses, investors and advisers.

“To float the idea of taxing trusts one week out from the Federal Budget is unfair to the millions of Australians who use and are beneficiaries of trusts,” Ms Wong said.

“CPA Australia supports a fair and sustainable tax system, including targeted measures to address inappropriate tax minimisation. However, the lack of clarity around what the 30% tax would entail is causing panic and uncertainty – this is poor policy development.

“It also looks like a revenue grab, particularly as the Treasurer has advised there will be no income tax cuts or other benefits to the Australian public as the result of changes to the tax system.

“Trusts are a legitimate and long-standing structure used by small businesses, farmers, tradies, professionals and investors for asset protection, succession planning and commercial risk management,” she said.

Wong said media reports suggested the policy could be implemented via a non-refundable withholding regime applying a minimum 30% rate to trust distributions.

This would materially alter after-tax outcomes and risks landing hardest on middle‑income Australians and smaller business operators, she said

“An effective personal income tax rate of 30 per cent typically applies to taxable income nearing $200,000, yet millions of middle‑income Australians receive trust distributions as part of normal business and investment activity,” Wong said.

“Low- and middle‑income recipients would end up paying more tax than if they earned that income directly, while most companies are taxed at 25 per cent and refundable franking credits apply to dividend earnings.

“To impose a blanket rate that sits at the higher end of tax rates in Australia isn’t about restoring equity – it risks introducing a punitive regime.”

“Trusts are not easily unwound and have a multitude of non‑tax purposes for their establishment. They are sitting ducks for the government to raise revenue, and the sudden imposition of a high tax rate on assets trapped in these structures is an unreasonable proposition.”

CPA Australia warned that introducing major new trust tax settings before addressing existing complexity would compound compliance burdens for businesses and advisers – particularly around family trust election rules.

“Small businesses and their advisers are already grappling with the growing complexity of trust taxation rules, particularly the family trust election rules. Fixing known issues in the current family trust rules should be the priority. Including allowing genuine mistakes to be corrected and ensuring outcomes are proportionate,” Ms Wong said.

Wong noted that a similar minimum tax concept was debated previously and ultimately not progressed, reflecting the sensitivity and complexity of trust reform.

“This is not a new policy concept. A similar proposal to apply a minimum tax rate to trust distributions was taken to the 2019 Federal Election but was ultimately not pursued,” she said.

“That history reflects the complexity and sensitivity of trust taxation reform. Trusts are not exclusively used by high‑wealth individuals – they are embedded across Australia’s small business and family enterprise landscape.

“Changes like this cannot be dumped on an unsuspecting public with no details, no consultation, no modelling and no transparency. It didn’t work in 2019 and it doesn’t work now.”

Wong said if the government proceeds, it must publish full design details and undertake genuine consultation, including modelling of impacts on small and medium‑sized businesses and the broader economy.

“Tax reform should not be driven solely by revenue objectives,” she said.