Legal Insights
Post Budget Tax Changes: Are SMSFs Now More Effective Than Discretionary Trusts?
Handed down on 12 May 2026, the 2026-27 Federal Budget was notably uneventful for self-managed superannuation funds. Importantly, it left key superannuation concessions unchanged, including the one-third capital gains tax discount available for complying superannuation funds. In contrast, the proposed introduction of a 30% minimum tax on taxable income of discretionary trusts has strengthened the relative tax advantages of superannuation, reinforcing its importance wealth structuring and effective tax planning vehicle.
Back Track and Carve Out – Testamentary Trusts Excluded from 30% Trust Tax
The 2026-27 Federal Budget proposed to introduce a 30% minimum tax on taxable income of discretionary trusts from 1 July 2028. The original proposal raised concerns as it was suggested to apply to discretionary testamentary trusts, potentially affecting trusts established by a will for a legitimate succession planning purpose. Following consultation, the Government has amended the proposal to exclude genuine testamentary trusts from the new minimum tax, subject to integrity requirements to ensure that they are designed for a legitimate purpose.