If you operate your business or manage family wealth through a discretionary trust, you are likely used to the flexibility it provides. However, the 2026-27 Federal Budget delivered by Treasurer Jim Chalmers on 12 May 2026 has introduced a major shift for trust structures. For many Australians, the question is no longer just about asset protection, but how these tax changes will impact their ability to secure finance.
The headline change is the introduction of a 30 percent minimum tax on discretionary trust income, starting from 1 July 2028. While that date feels far away, the lending landscape often reacts to future tax liabilities well before they take effect. At Simple Loans, we provide a finance comparison tool to help you navigate these shifting waters. Whether you are looking for business finance or a personal loan, understanding these new rules is vital for your long-term planning.
The 30 Percent Minimum Tax Explained
Currently, discretionary trusts allow for income to be distributed to beneficiaries in lower tax brackets, which can significantly reduce the overall tax paid by a family group or business entity. From 1 July 2028, this becomes more regulated. All income distributed from a discretionary trust will be subject to a minimum tax rate of 30 percent.
This measure aims to level the playing field and ensure that high-income earners using trusts contribute a consistent amount to the tax base. For business owners who rely on trust distributions to service their loans, this change could alter your net cash flow. When you apply for a loan in the future, lenders will likely look at your after-tax distribution. A higher tax bill within the trust may mean less take-home income available to meet repayments.
The government has included a three-year rollover relief period to help entities restructure if the new rules make their current setup unviable. This transition period is a good time to use a finance comparison tool to see how different lending products might fit your updated financial profile.
Impact on Borrowing Power and Serviceability
Lenders assess your ability to repay a loan based on your provable income. If you have historically distributed trust income to family members with no other earnings to stay under the tax-free threshold, your effective household income might decrease under the new 30 percent rule.
From 2028, if a distribution that was once taxed at 0 or 15 percent is suddenly taxed at 30 percent, your disposable income drops. This could impact your serviceability for everything from car loans to significant commercial debts. It is important to remember that rates in the market can vary, with some starting as low as 5.99% p.a. while others reach 29.99% p.a. depending on your risk profile and the nature of the loan.
Using a finance comparison tool like Simple Loans allows you to see what options are available based on your current and projected income. Staying ahead of the 2028 deadline means you can restructure your debt or your trust distributions before the tax changes impact your credit applications.
Business Finance and the New Tax Landscape
The 2026-27 Budget was not all about new taxes. For small and medium businesses operating through trusts, there are several sweeteners that could offset the trust tax changes. For example, the $20,000 Instant Asset Write-Off has been made permanent from 1 July 2026 for businesses with a turnover up to $10 million.
Additionally, a new two-year loss carry back provision starts on 1 July 2026 for companies with turnover up to $1 billion. While this applies to companies, many business groups use a combination of trust and company structures. If your trust-owned business is looking to upgrade equipment or vehicles, these measures provide a significant incentive to invest now.
If you are considering new equipment, you might want to look into /business-finance options. By combining the permanent instant asset write-off with a competitive loan, you could improve your business efficiency while managing your tax obligations.
Timing Your Loans Around Budget Changes
The 2026-27 Budget introduced various measures that roll out over the next few years. While the trust tax starts in 2028, other changes arrive sooner. The CGT 50 percent discount will be replaced by inflation indexation plus a 30 percent minimum tax from 1 July 2027. Interestingly, new builds keep the choice of the old or new system, and negative gearing will be limited only to new builds from that same date.
If your discretionary trust holds property, these dates are critical. Taking out a loan to expand your portfolio or renovate a commercial space may be more beneficial if done before these restrictive measures kick in. Grandfathering rules apply to existing investors, which means the decisions you make in 2026 and 2027 could lock in tax treatments that will no longer be available to new buyers in late 2027.
Because the budget also forecasts a deficit of $31.5 billion for FY27, the government is looking for ways to bolster revenue. This suggests that the 30 percent trust tax is unlikely to be repealed or softened before its 2028 start date.
How to Prepare Your Trust for Future Lending
Preparation is the key to maintaining your borrowing capacity. Even though 2028 seems distant, lenders often look at three years of financial history. By 2027, the 2028 tax changes will be a factor in long-term loan assessments.
First, review your current trust deed and distribution strategy. Talk to a qualified accountant about how the 30 percent minimum tax will affect your specific cash flow. Second, consider the role of the new $250 Working Australians Tax Offset arriving in 2027-28. While small, every bit of tax relief helps when proving serviceability to a lender.
Third, use a finance comparison tool to monitor the market. Knowing the difference between a 5.99% p.a. rate and the higher end of the market can save you thousands in interest, which helps offset the increased tax burden on your trust distributions. You can start this process today by visiting /quick-quote to see where you stand.
Frequently Asked Questions
Does the 30 percent tax apply to all trusts?
The budget measure specifically targets discretionary trusts, which are often called family trusts. Fixed trusts or unit trusts may be treated differently depending on their structure and how they distribute income. It is important to confirm your specific trust type with a legal professional.
Will this change my existing loans?
Your existing loan contracts will generally not change because of a tax law update. However, when you go to refinance or apply for a new loan, the lender will use the new tax rules to determine how much money you have left over to pay back the debt.
Can I still use a trust to get a car or personal loan?
Yes, you can still borrow through or supported by a trust. Lenders will simply adjust their calculations to account for the 30 percent minimum tax on the income you receive from that trust. Using a comparison tool can help you find lenders who are more familiar with complex trust structures.
Finding the Move That Works for You
Navigating the 2026-27 Budget measures requires a clear view of your financial future. With trust tax changes, CGT shifts, and new business incentives all happening at once, the lending environment is becoming more complex. At Simple Loans, we aim to make the process of finding finance as straightforward as possible. By using our comparison tool, you can see a range of products and rates starting from 5.99% p.a. (up to 29.99% p.a.) that might suit your evolving needs. Whether you are a sole trader, a business owner, or managing a family trust, staying informed is your best asset.
To see how your current financial situation matches up with available loan products, head over to /quick-quote and get a clearer picture of your options today.
Simple Loans is a finance comparison tool. AFCA member 96925. Australian Credit Licence 509582. Information is general only and does not constitute financial advice.
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