The Family Business Association (FBA) is calling on the Australian government to disclose the financial projections behind its proposed minimum tax on discretionary trusts before the consultation deadline of September 18. The group states that without this information, family-run enterprises—which make up 70% of Australian businesses and employ half the workforce—cannot evaluate the policy’s real-world impact.
Discretionary trusts serve as essential tools for family businesses to manage income volatility, succession strategies, and shifting family roles. The new tax proposal introduces layers of uncertainty, pushing owners to consider options like fixed distributions, tax rollovers, paying the minimum rate, or restructuring, each carrying extra advisory fees. The FBA insists on transparency about three critical areas: projected revenue from the revised tax, the total number of affected businesses, and how many of the 350,000 small business trusts will adopt each compliance path.
CEO Catherine Sayer stressed that family businesses do not seek preferential treatment but demand a tax system that remains straightforward, equitable, and functional. She pointed out that the draft legislation remains incomplete, with key rules on enforcement and administration still unpublished. This lack of clarity has already caused new trust formations to plummet by 50% to 70% since the Budget, according to trust service providers. Sayer described the drop as evidence of businesses freezing plans entirely, not merely adjusting them, a result no policy was designed to produce.
Family-owned enterprises function on different principles than large corporations. Their choices frequently balance long-term family considerations alongside financial logic. The proposed tax, if finalized without clear modeling, could erect unnecessary obstacles for these companies, which form the backbone of Australia’s economy. Without reliable data, businesses lack the foundation to make strategic decisions, leaving them in a state of suspended activity.
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The FBA’s request goes beyond revenue estimates. It also seeks a breakdown of which businesses will face the highest tax burdens and how compliance costs will differ across sectors. Sayer framed the issue as one of equity: “A policy claiming fairness must show who bears the cost, and distributional analysis is the only way to demonstrate that.” Without this level of detail, the tax risks overwhelming smaller operators already struggling with detailed tax obligations.
Policy uncertainty has already led some families to postpone trust formations altogether. The FBA’s data indicates that many are not restructuring existing trusts to comply but instead delaying or canceling new ones, a direct result of prolonged ambiguity. The association’s demand for pre-consultation modeling reflects a deeper worry: poorly designed legislation could undermine the businesses sustaining Australia’s economic stability.
While the government has made some revisions in response to initial feedback, the FBA argues further changes are essential. Without clear financial modeling, family businesses will continue operating without reliable guidance, forced to make choices based on speculation rather than facts. The consultation period provides an opportunity to refine the approach before lasting harm occurs.
