A new 30% trust tax could force finance brokers into costly restructuring. COSBOA’s Skye Cappuccio says the real cost goes beyond the tax bill.
Australia’s discretionary trusts are facing their biggest tax shake-up in decades, and finance brokers say the conversation so far has missed most of the story.
As part of the 2026-27 Federal Budget, the Government announced a 30% minimum tax on discretionary trusts, to take effect from 1 July 2028. The change would apply at the trustee level, replacing the current approach where trust income flows through to beneficiaries and is taxed at their individual marginal rates. The stated goal is to close the gap between tax paid through trust structures and tax paid by ordinary wage earners on comparable income.
Now three industry bodies, the Council of Small Business Organisations Australia (COSBOA), the Commercial & Asset Finance Brokers Association of Australia (CAFBA) and the Mortgage & Finance Association of Australia (MFAA), say the debate has focused almost entirely on the tax bill itself, while ignoring the operational disruption facing brokers who would need to restructure out of a trust.
“The focus has understandably been on the tax implications, but that’s only part of the story,” said COSBOA Chief Executive Officer Skye Cappuccio.
“For some regulated small businesses, restructuring could mean unpicking commercial and regulatory arrangements that have taken years to build. That is not a simple transition. It risks creating cost, delay and disruption for small businesses already operating in a difficult environment.”
For finance brokers specifically, restructuring isn’t just a legal and accounting exercise. It can mean revisiting lender accreditations, aggregator agreements, and for mortgage brokers, Australian Credit Licence or Credit Representative arrangements, before the business can keep operating under a new structure.
CAFBA Chair of Advocacy David Gandolfo OAM said the scale of that task is easy to underestimate.
“Commercial finance brokers arrange around 72 per cent of Australia’s commercial equipment finance. Any disruption to that accreditation network ultimately affects the small businesses relying on brokers to access the capital they need to purchase equipment, invest and grow,” Gandolfo said.
“For a midsized broking firm, this could mean the cost and disruption of renegotiating up to 50 separate lender accreditation agreements without any assurance that the new agreements will be accepted.”
He added that clients themselves could face flow-on costs. “Assistance will also be needed for business clients to assign or restructure loans, often resulting in significant break costs if loan assignments are impossible.”
MFAA CEO Anja Pannek said mortgage broking sits inside one of Australia’s most heavily regulated small business sectors, which makes restructuring particularly complex.
“Restructuring a business that operates through a discretionary trust is far more than a legal or accounting exercise,” Pannek said. “For mortgage brokers, it may require changes to Australian Credit Licence or Credit Representative arrangements, lender accreditations, aggregator agreements, professional indemnity insurance and compliance documentation.”
Pannek pointed to the scale of what’s at stake for consumers, too. “Mortgage and finance brokers help Australians secure more than 80 per cent of new residential home loans and support thousands of small businesses to access finance. Any reforms should minimise unnecessary disruption for these businesses while still achieving the Government’s policy objectives.”
The Government has proposed a three-year rollover relief window to help businesses restructure out of discretionary trusts without immediate capital gains tax consequences. But no grandfathering has been proposed for existing structures, meaning current trusts will be captured by the new regime from the 2028 start date regardless of how long they’ve operated.
The three organisations are urging the Government to exclude or grandfather small business trading trusts, or at minimum, provide practical transition arrangements that avoid disruption to licensing, accreditation and access to finance.
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