The Business Council of Australia (BCA) thanks the Senate Economics Legislation Committee (the Committee) for the opportunity to make a submission on the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 (the Bill). The BCA’s submission focuses on the sections of the Bill that implement the minimum 30 per cent tax on discretionary trusts and make related changes.
The BCA represents over 120 of Australia’s largest employers. We develop and advocate for policy that raises living standards for all Australians.
The BCA’s key concerns with the proposed changes are that they:
- Increase Australia’s already uncompetitive business tax burden.
- Impose double tax on trust distributions to companies, with effective tax rates potentially up to 77 per cent.
- Do not provide adequate exemptions for trusts held by listed companies and commonly used for investment.
- Add substantial complexity and compliance costs, including restructuring costs.
- Involve inadequate consultation for legislation of this complexity.
- Create uncertainty by having a dozen ministerial rule making powers.
Australia has an urgent task to lift productivity, grow real wages and improve living standards, but the proposed 30 per cent minimum tax on trusts will run counter to these goals. The proposal will increase the tax burden in Australia by more than $4 billion per year. The tax increase comes in the context of weak levels of business investment, an uncompetitively high tax burden on investment and business, and recent decisions to impose increased taxes on business.
The minimum tax legislation will also increase tax complexity, compliance costs and uncertainty, including for commercial trust structures that do not facilitate income splitting. The Government’s implementation cost estimate of $939 million appears far too low because it relies on an unrealistic, assumed cost for professional advice of $91 per hour. The legislation also relies on 12 rule making powers to give effect to the overall policy. This means that stakeholders and the Parliament are unable to understand the full implications of the proposed changes.
Given the ongoing concerns with the measure overall and the continuous changes to the policy, the BCA recommends the proposed trust minimum tax should not proceed.
If the Bill nevertheless proceeds, several important issues should be addressed.
The Bill contains the deliberate double taxation of distributions from minimum tax trusts to listed or widely held companies. This is a punitive tax policy by design, and the BCA sees no justification for an effective tax rate that could approach 77 per cent. Distributions to listed or widely held companies do not facilitate the income splitting or tax deferral targeted by the measure.
The Bill should expressly exclude managed investment trusts and trusts wholly owned by specified institutional investors to avoid unnecessary uncertainty and adverse effects on investment. It should also limit ministerial discretions and minimise the need for restructures that could attract stamp duty. Important exclusions should be specified in primary legislation to provide greater certainty and parliamentary scrutiny.
The Committee should seek a clearer explanation of why the corporate offset and withholding tax alternatives have not been adopted. It should also request an extension to the Inquiry. The complexity of the Bill and substantial changes since earlier consultation require sufficient time to identify unintended consequences and reduce the risk of further corrective amendments.