CGT Reform for Family Trusts: Streaming, Bucket Companies, and the Separate 2028 Trust Minimum Tax

General information only. This is not tax or financial advice. Trust structuring and distribution decisions are highly fact-specific — consult a registered tax agent and, for deed or restructure questions, a lawyer.

A discretionary trust is not a taxpayer in its own right for most of what it earns. Under Division 6 of the Income Tax Assessment Act 1936, a beneficiary who is presently entitled to trust income at 30 June is assessed on their share of the trust’s net income — the trust itself is generally a pass-through. That structural fact is the whole story of how the enacted CGT reform interacts with a family trust: the reform’s rules (cost base indexation, the 30% minimum tax, the abolition of the 50% discount) do not apply to “the trust” as a single entity. They apply separately to whichever beneficiary ends up presently entitled to each dollar of capital gain — via the streaming and attribution rules in Subdivision 115-C of the ITAA 1997.

This matters because a family trust with four adult beneficiaries on four different marginal rates, one of whom draws the Age Pension, can see the SAME capital gain taxed four different ways depending purely on the trustee’s distribution resolution. It also matters because a second, entirely separate reform — the Budget 2026 30% minimum tax on discretionary trusts — has a similar-sounding “30%” number, a similar-sounding start date, and is routinely conflated with the CGT reform in commentary. They are not the same measure, they are not both law, and this article is careful to keep them apart.

The short version. The CGT discount reform (Acts No. 49 and 50 of 2026, in force) does not touch how trusts are taxed structurally — it changes what happens to a capital gain once it reaches a beneficiary. Stream a gain to an individual and their own indexation + 30% minimum tax applies; stream it to a complying super fund beneficiary and the fund’s 33⅓% discount is untouched; stream it to a company beneficiary and the company rate (25% or 30%, no discount, no indexation) applies as it always has. Separately, the Budget 2026 proposal for a trustee-level 30% minimum tax on discretionary trust income generally — not capital-gains-specific, and not yet law — would start 1 July 2028 if it passes, with a rollover-relief window for restructuring already open from 1 July 2027. Trustees have two unrelated jobs due around 30 June 2027: the ordinary annual distribution resolution, and — for the first and only time — obtaining market-value evidence for every trust asset under the CGT reform’s one-off deemed-sale rule.

For the reform’s core mechanics (three-bucket transition, indexation math, the 30% minimum tax), start with 50% CGT Discount Reform: Cost Base Indexation Explained if you haven’t already. This article assumes that background and focuses on what changes when the asset sits inside a discretionary trust rather than being held directly.

Two different 30% numbers — do not conflate them

This is the single most common confusion in family-trust planning conversations right now, because both measures carry a “30%” headline figure and both were announced in the same Budget.

Because the second measure is not yet law, this article treats it exactly as the site’s dedicated explainer does — see our Budget explainer for the full mechanics as announced (trustee-level liability, non-refundable beneficiary credits, corporate-beneficiary carve-out, the 1 July 2027 – 30 June 2030 restructure rollover window, and the full exclusion list). The measure has since become a bill, and our bill explainer covers what it does. Nothing in this article should be read as claiming the trust minimum tax is in force — it is not, as at 9 November 2026.

How a trust’s capital gain reaches the reform’s three buckets

The CGT reform’s transitional architecture (recapped from the master article) applies to the trust as the legal owner of the asset in exactly the same way it applies to an individual:

• Bucket A — asset bought and sold entirely before 1 July 2027: 50% discount, unchanged.
• Bucket B — asset held by the trust at 30 June 2027 and sold after: the Subdivision 112-E deemed sale applies to the trust’s holding. Every CGT asset the trustee holds at 30 June 2027 is deemed disposed of just before 1 July 2027 and immediately reacquired. The pre-1 July 2027 notional gain is calculated under the old law (50% discount preserved) and deferred; growth after 1 July 2027 is taxed under indexation plus the 30% minimum tax. The split uses market valuation at 1 July 2027 as the primary method, with a Minister-determined apportioning method available as an election.
• Bucket C — asset bought by the trust after 1 July 2027: wholly new rules across the full holding period.

The trustee — not the beneficiary — is the one who holds the asset, so the trustee is the one who needs the 1 July 2027 valuation evidence, exactly as an individual owner would. Where this differs from individual ownership is what happens next: the trust’s net capital gain (legacy-discounted portion, reform-indexed portion, or a Bucket-C wholly-new-rules gain) does not stop at the trust level. It flows to whichever beneficiary or beneficiaries the trustee makes presently entitled to it.

Streaming and Subdivision 115-C: why the beneficiary’s own status controls the outcome

Since the 2011 “Bamford” streaming reforms, Subdivision 115-C of the ITAA 1997 governs how a trust’s capital gains are attributed to beneficiaries. Section 115-215(1) states the purpose in as many words: “The purpose of this section is to ensure that appropriate amounts of the trust estate’s net income attributable to the trust estate’s capital gains are treated as a beneficiary’s capital gains when assessing the beneficiary, so: (a) the beneficiary can apply capital losses against gains; and (b) the beneficiary can apply the appropriate discount percentage (if any) to gains.” In other words, the tax treatment of a distributed capital gain is worked out by reference to the recipient beneficiary’s own character, not a single trust-level rate — subsection (4) confirms that where the trust’s gain was already discounted, the beneficiary’s own capital gain under this section is treated as a discount capital gain only “if you are the kind of entity that can have a discount capital gain.” A beneficiary is “specifically entitled” to a capital gain (the streaming mechanism) when they have received, or can be expected to receive, a net financial benefit referable to that gain, and the resolution must clearly identify the beneficiary and the specific capital gain — a generic percentage split of “income” does not achieve streaming (the same documentation standard covered in Trust Distribution Resolutions: Why 30 June Matters).

Because attribution looks through to the beneficiary’s own status, the enacted CGT reform produces genuinely different outcomes depending on who the trustee streams the gain to:

Adult individual beneficiary. Their attributed share of the gain is split into legacy/reform portions exactly as if they held the asset directly (using the trust’s acquisition date and the Subdiv 112-E split), then taxed at their own marginal rate, with the 30% minimum tax applying to their reform-portion share if their MTR would otherwise sit below 30%. If that beneficiary happens to be on a payment from the section 119-15 statutory list (Age Pension, JobSeeker, Carer Payment, and the rest), they personally are exempt from the minimum tax on their share — a trust with one beneficiary on the pension and one on a high salary can have the pensioner’s share of a gain escape the 30% floor while the salaried sibling’s identical dollar amount does not. The exemption travels with the beneficiary, not with the trust.

Complying superannuation fund beneficiary. Complying super funds are excluded from the new CGT regime and keep the 33⅓% discount. Subdivision 115-C’s attribution logic means this exclusion travels with the beneficiary’s own status: a capital gain streamed to an SMSF beneficiary is taxed in the fund’s hands under the fund’s existing rules, not the trust’s. (This is a narrower point than the SMSF-specific mechanics — accumulation vs pension-phase exemption, Division 296 — covered in the SMSF and super deep dive; the point here is only that trust-to-SMSF streaming does not import the reform.)

Company beneficiary. Companies have never received the CGT discount and the enacted reform doesn’t change that — no discount before, no indexation after, tax on the full nominal gain at the company rate (25% for a base rate entity, 30% otherwise). A capital gain streamed to a corporate beneficiary is unaffected by the reform’s mechanics in either direction.

Minor beneficiary. Division 6AA penalty rates on unearned income (66% on the band from $417 to $1,307, then a flat 45% above $1,307) already sit above the reform’s 30% floor, so the minimum tax is moot for a minor’s distribution — the penalty rate was always the binding constraint. The reform doesn’t make distributing capital gains to minors any more attractive than it already wasn’t.

Bucket companies after the CGT reform — a partial reversal, not a wholesale one

The existing site coverage of the (proposed, not-yet-law) trust minimum tax already flags that ~80,000 companies receive trust distributions with 83% having no other business activity — so-called bucket companies used to cap tax at the corporate rate. That analysis is about ordinary trust income and the proposed measure’s removal of non-refundable credits for corporate beneficiaries, which — if it becomes law — would make bucket companies considerably less attractive for ordinary income from 1 July 2028.

The enacted CGT reform runs a different, narrower calculation for capital gains specifically, and for some holdings it pushes in the opposite direction. Before the reform, an individual on the top marginal rate (45%) got the 50% discount, for an effective rate of 22.5% on a capital gain — comfortably cheaper than even the 25% base-rate company tax. After the reform, whether that still holds depends on how much of the gain accrues after 1 July 2027 and how fast the asset grows relative to its indexed cost base.

Worked example — a gain split roughly two-thirds legacy, one-third reform. The trust bought an asset for $200,000 on 1 July 2015 and sells it for $400,000 on 1 July 2033 (18-year hold: 12 years pre-reform, 6 years post-reform), splitting the gain by time.

• Nominal gain: $200,000.
• Legacy share = 12 / 18 = 66.7% → legacy gain $133,323 (the day count includes leap days).
• Reform share = 33.3% → reform gain (nominal) $66,677.
• Indexation applies to the cost base the trust is deemed to have reacquired the asset for on 1 July 2027 — its value that day, which on the same time split is $200,000 + $133,323 = $333,323. Over 6 years at an assumed 2.5%/yr CPI the factor is 1.025⁶ ≈ 1.1597, so the indexation adjustment ≈ $333,323 × 0.1597 ≈ $53,230. Real reform gain ≈ $13,447.

If streamed to an individual beneficiary at the 45% marginal rate:

• Legacy portion: $133,323 × 50% × 45% ≈ $29,998.
• Reform portion: $13,447 × 45% ≈ $6,051 (above the 30% minimum, so the 45% MTR controls).
• Total tax ≈ $36,049 — an effective rate of 18.0% on the $200,000 nominal gain.

If streamed instead to a corporate (bucket-company) beneficiary at the 25% base-rate:

• Full nominal gain taxed at 25%, no discount, no indexation (companies never had either): $50,000 — an effective rate of 25.0%.

Pre-reform, the same 45%-MTR individual would have paid $200,000 × 50% × 45% = $45,000 (22.5% effective) — cheaper than the company’s 25%. Post-reform the individual pays even less, 18.0%, because this asset grew only about 3.1% a year after 1 July 2027 and indexation on its $333,323 reacquired cost base shelters most of that growth. For this holding pattern the reform widens the individual’s advantage rather than flipping the ranking.

Worked example — a wholly post-reform (Bucket C) gain. Asset bought by the trust for $200,000 on 1 July 2028, sold for $400,000 on 1 July 2038 (10 years, entirely under the new rules — about 7.2% a year). Nominal gain $200,000, CPI factor over 10 years at 2.5%/yr ≈ 1.280.

• Indexed cost base ≈ $200,000 × 1.2801 ≈ $256,017 — an indexation adjustment of ≈ $56,017. Real gain ≈ $143,983.
• At 45% MTR: tax ≈ $64,792 — effective rate 32.4% on the nominal gain (well above the 30% floor, MTR controls).
• At the 25% company rate on the full $200,000 nominal gain: $50,000 — effective rate 25.0%.

For a fresh post-2027 purchase that doubles over a decade, the individual beneficiary pays materially more than a corporate beneficiary would — this is where the reform does flip the ranking. The more of an asset’s growth falls after 1 July 2027, and the further that growth outruns CPI, the more the comparison favours a company.

The catch, and why this is a partial reversal, not a rule of thumb. None of this means bucket companies are now unambiguously better for capital gains — the first example shows the opposite. A low-growth asset, or one whose gain mostly accrued before 1 July 2027, where indexation shelters most of the reform-portion gain still favours streaming to an individual over a flat 25-30% company rate — the cost base indexation article’s “slow-growth assets can pay less under the new rules” finding applies here too. And the comparison only concerns the CGT-specific 30% floor; it says nothing about the proposed (not-yet-law) trust minimum tax’s treatment of ordinary trust income, which runs on entirely separate, harsher logic for corporate beneficiaries (no non-refundable credit at all, per the existing explainer). Model each disposal — don’t default to “company is now better” as a blanket rule.

Does the CGT reform’s 30% minimum tax stack with the proposed trust minimum tax?

This is the point where honesty about the state of the law matters most. If the discretionary trust minimum tax proceeds as announced, from 1 July 2028 the trustee would separately owe 30% on the trust’s taxable income, with non-refundable credits flowing to non-corporate beneficiaries for tax the trustee has already paid — a design explicitly intended to prevent double taxation, not to add two 30% floors into a 60% one.

What the bill settles: a capital gain sits inside the proposed base. The explanatory memorandum says minimum tax income “uses the existing concept of the net income of the trust estate” and “is defined by exclusion” (para 1.34), and capital gains are not one of the listed exclusions. Net income “may include capital gains”, and gains streamed to a beneficiary “are also included in the beneficiary’s share of adjusted net income for minimum tax purposes” (para 1.52).

What it does not spell out: how the two minimum taxes combine on the same gain. Schedule 1 of the bill, which creates the trust minimum tax, does not refer to Division 119, and neither does the memorandum’s chapter on that schedule. Do not assume an answer. If your family trust realises meaningful capital gains, get current advice on this interaction before relying on any modelling that assumes a particular treatment. The bill is still before the Senate, so its wording could change.

What can be said: each beneficiary’s offset would match the minimum tax the trustee pays on their share of the income, and it would be non-refundable. Whether that offset can reduce a Division 119 minimum tax on the same gain is the part to confirm once the law is final.

Trustee record-keeping: two 30-June-2027 obligations, not one

Every family trust already has a recurring, permanent obligation: the trustee must make a valid distribution resolution by 30 June each year (see Trust Distribution Resolutions: Why 30 June Matters and Trust Distribution Deadline: Why 30 June Resolutions Matter for the mechanics, section 99A default-rate risk, and streaming documentation standard). That obligation is unrelated to the CGT reform and recurs every year regardless of it.

30 June 2027 additionally carries a one-time, transitional obligation that exists only because of the CGT reform: the trustee must obtain and keep evidence of the market value of every CGT asset the trust holds at that date, because that valuation is the primary method for splitting each asset’s gain between the legacy 50%-discount bucket and the new indexation/minimum-tax bucket under Subdivision 112-E. For a trust holding property, this means a contemporaneous valuation or appraisal, not a guess made years later at actual sale. For listed shares and units, the closing price on the day does the job. This applies to every asset the trust holds regardless of when it was acquired — including any pre-1985 asset the trust might still hold, since post-1 July 2027 growth on a pre-CGT asset becomes taxable for the first time (see the deceased estates deep dive for the mechanics of the pre-1985 reset, which apply identically whether the pre-CGT asset sits in an individual’s hands or a trust’s).

Practically: the trustee resolving the 2026-27 distribution in the usual way by 30 June 2027 should, in the same sitting, also instruct that market valuations be obtained for the trust’s property and (where not already evidenced by quoted prices) other illiquid holdings as at that date. Two different documents, two different purposes, one calendar deadline.

Planning levers for trustees

1. Match beneficiary status to gain character, not just marginal rate. A welfare-recipient beneficiary’s exemption from the 30% minimum tax is personal to them — if the trust deed and family circumstances allow it, streaming a capital gain to that beneficiary (rather than defaulting to the highest-MTR adult) can matter more post-reform than it did under the flat 50% discount, because the minimum tax specifically targets low-marginal-rate recipients who are not on the exempt list.
2. Re-run the bucket-company comparison per disposal, not once. As shown above, the ranking between an individual beneficiary and a corporate beneficiary depends on the asset’s growth rate and how much of its holding period falls after 1 July 2027 — it is not a fixed rule that favours one structure across the board.
3. Get the 1 July 2027 valuations organised well before the date, alongside (not instead of) the ordinary annual resolution. Formal property valuations booked in April–May 2027 will be far cheaper and more defensible than a reconstruction attempted at a 2030s sale.
4. Track the trust minimum tax bill through the Senate, rather than planning against Budget-announcement detail. The rollover relief window for restructuring out of a discretionary trust is proposed to run 1 July 2027 – 30 June 2030 regardless of exactly when the underlying bill passes — but the measure is not law yet, and the bill does not spell out its interaction with Division 119 capital gains.
5. Don’t let the trust minimum tax uncertainty stall genuine CGT-reform decisions. The 1 July 2027 valuation obligation and the annual distribution resolution are both certain and both due on a fixed date; the trust minimum tax is not due until (at the earliest) 1 July 2028 and may still change in the Senate. Treat them as separate workstreams.

FAQs

Does the CGT reform change how my discretionary trust is taxed?

Not structurally. The trust is still generally a pass-through for present entitlement purposes under Division 6. What changes is the treatment of any capital gain once it is attributed to a beneficiary: an individual beneficiary’s share now gets cost base indexation plus the 30% minimum tax instead of the 50% discount (for the post-1 July 2027 portion), while a complying-super-fund beneficiary or corporate beneficiary’s share is taxed under their own unchanged rules.

Is the 30% trust minimum tax the same thing as the CGT reform’s 30% minimum tax?

No. They are two different measures with two different bases, two different start dates, and — critically — different legal status: the CGT reform’s minimum tax is law (from 1 July 2027); the discretionary trust minimum tax is a bill, not yet law, that would apply from 1 July 2028 if it passes.

If both measures eventually apply, does a beneficiary pay 60% in total?

Not by design. The proposed trust minimum tax comes with non-refundable credits for non-corporate beneficiaries for tax the trustee has already paid, specifically to avoid stacking. But the bill and its explanatory memorandum do not spell out how that credit works against the enacted Div 119 minimum tax on the same gain, so treat any confident claim about the combined rate as unverified.

Do bucket companies still make sense after the CGT reform?

For ordinary trust income, that question is separate and turns on the proposed trust minimum tax (which specifically removes the non-refundable credit for corporate beneficiaries if it passes). For capital gains specifically, the enacted reform narrows — and for long, high-growth, mostly-post-2027 holdings can reverse — the previous gap between an individual’s discounted rate and the flat company rate. Model each disposal; don’t assume either structure wins by default.

What must the trustee do by 30 June 2027?

Two separate things: the ordinary annual distribution resolution (as every year), and — only because of the CGT reform, and only this once — obtaining market-value evidence for every CGT asset the trust holds, to support the split between legacy and reform treatment when those assets are eventually sold.

Sources

• Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49 of 2026) and Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (No. 50 of 2026) — royal assent 26 June 2026, per the site’s canonical CGT Reform: What Passed; assent, Act number and Senate amendment count independently verified against the APH bill homepage (Status: Act; 30 Government + 3 Australian Greens amendments agreed to 25 Jun 2026; Assent 26 Jun 2026). The Act’s own text (read directly from the ATO-hosted PDF) confirms Subdivision 112-E’s deemed-sale-and-reacquisition mechanic (s 112-165(2)), the preservation of the 50% discount on the pre-1-July-2027 notional gain (s 112-170(3)), and market valuation at 1 July 2027 as the primary split method (s 112-165(3)) — all consistent with this article’s description and the site’s canonical reform article.
• Income Tax Assessment Act 1936, Division 6 (present entitlement) and Division 6AA (minor beneficiary penalty rates) — per the site’s existing Trust Distribution Resolutions explainer
• Income Tax Assessment Act 1997 (Cth), s 115-215 — Assessing presently entitled beneficiaries — the statutory purpose statement (subsection (1)) quoted directly above, and the discount-character carryover in subsection (4)
• ATO: Tax reform — introducing a minimum tax on discretionary trusts — the ATO’s own words: “This measure is not yet law,” confirming the status claim this article’s central distinction rests on
• Pitcher Partners: Federal Budget 2026-27 — Minimum tax on discretionary trusts — secondary corroboration of the ATO position, plus mechanics detail
• Budget 2026: 30% Minimum Tax on Discretionary Trusts — the site’s canonical explainer for the separate, proposed measure

Related reading

• 50% CGT Discount Reform: Cost Base Indexation Explained — the core reform mechanics this article builds on
• CGT Reform: What Passed — Final Law From 1 July 2027 — the canonical statement of the enacted Acts
• Budget 2026: 30% Minimum Tax on Discretionary Trusts — full mechanics of the separate, not-yet-law proposal
• Trust Distribution Resolutions: Why 30 June Matters — the annual present-entitlement deadline and section 99A risk
• Trust Distribution Deadline: Why 30 June Resolutions Matter — streaming documentation standard
• CGT Reform for Small Business — for trusts that are also small business entities
• CGT Reform for SMSFs and Super — for the complying-super-fund beneficiary case in detail