The Budget contained two changes that fundamentally reshape founder personal economics: a new 30% minimum tax on discretionary trusts, and the replacement of the 50% CGT discount. Both interact, and for founders holding startup equity in a family trust they combine to materially increase the tax on a successful exit.

One caveat. The trust measure is committed from 1 July 2028. The CGT measure is committed from 1 July 2027, but the government has flagged consultation on a possible carve-out for startups. No detail yet, but that consultation is the single biggest variable on your final tax outcome.

Change 1: 30% minimum tax on discretionary trusts (committed)

The mechanic. From 1 July 2028, the trustee of a discretionary trust pays a minimum 30% tax on the trust’s taxable income at the trustee level, regardless of who the income is distributed to. Non-corporate beneficiaries (individuals) receive a non-refundable tax credit for the trustee tax paid, which can offset their own marginal tax obligations. Corporate beneficiaries do not receive this credit. A 3-year rollover window from 1 July 2027 to 30 June 2030 allows trusts to restructure into companies or fixed trusts without triggering income tax or CGT consequences.

Why. A lot of the benefit of the old rules was being able to distribute income to lower-taxed beneficiaries. The 30% floor closes that.

What this means for founders specifically. Most founders hold their startup shares in a discretionary trust set up at incorporation, to provide flexibility on distribution and exit, as well as asset protection. The trust is rarely a live income-distribution vehicle in the early years (the company isn’t making distributions), so the new rules don’t apply during the build phase. They apply at three specific moments:

1. When the company starts paying franked dividends to the trust. Once your startup is profitable enough to distribute, the franked dividend flowing into the trust is now subject to the 30% trustee tax floor. You can still distribute flexibly, but the trust is now tax-neutral at best. The benefit of streaming to a lower-taxed spouse or family member is gone.
2. When the company is sold and the capital gain flows through the trust. This is the big one, covered in the next section.
3. If you use a corporate beneficiary (“bucket company”) to defer tax. The new rules block this entirely.

What you need to know. The measure applies from 1 July 2028 with no grandfathering. Fixed trusts, widely held trusts, super funds, charitable trusts, special disability trusts, and pre-12 May 2026 testamentary trusts are excluded — none typically relevant to founder structures.

If you are the sole or majority beneficiary on the top marginal rate, the immediate impact of the trust change in isolation is muted: your marginal rate is already above 30%, so the trustee tax is offset by your personal credit. The pain comes from losing the flexibility to distribute to lower-rate beneficiaries, and from the interaction with CGT on exit.

The 30% rate is straightforward, but how it works in practice is still to be designed. Treasury is consulting on technical detail: how the tax is collected, how excess franking credits in a trust are handled, and how broad the rollover relief is. These may shift in the legislation, but the headline measure is committed.

Change 2: The CGT discount becomes indexation with a 30% floor (subject to consultation for startups)

The mechanic. From 1 July 2027, the 50% CGT discount disappears. Instead, the cost base of the asset is indexed to CPI, so only the real gain (above inflation) is taxed. The real gain is then taxed at the holder’s marginal rate, with a 30% minimum tax floor regardless of marginal rate. This is essentially a return to the pre-1999 indexation regime, with one important addition: the 30% floor.

The government has signalled consultation on the treatment of early-stage and startup businesses. The headline numbers below assume no startup carve-out lands. If one does, the maths shifts meaningfully.

Why. Indexation taxes only the real (inflation-adjusted) gain, which the government argues is the principled position. The 30% floor closes deferral strategies where investors time disposals to low-income years.

Worked example. A founder incorporated their startup in 2018 and issued themselves shares with a cost base of $1,000. They sell the company for $5,000,000 in 2029. The nominal gain is $4,999,000.

Under current rules (had they sold before 1 July 2027): 50% discount applies, leaving $2,499,500 taxable. At 47% marginal rate, tax of approximately $1,175,000. Effective rate on the full gain: 23.5%.

Under the new rules (sold in 2029, assuming no startup carve-out): cost base is indexed from 2018 to 2029. Assuming roughly 30% cumulative CPI, the indexed cost base becomes $1,300. The real gain is $4,998,700, taxed at 47% marginal rate, producing tax of approximately $2,349,000. Effective rate: 47%.

Indexation only meaningfully reduces tax for assets with substantial cost bases. For founders whose entire return is gain from a near-zero base (which is most founders), indexation gives almost no relief.

Why founders should care. Equity-based compensation for early team members becomes less valuable on the same logic. ESOPs, loan-backed share plans, and premium-priced options all become harder to sell as a meaningful component of total compensation.

What you need to know. The change applies prospectively. Gains accrued before 1 July 2027 keep the 50% discount. Gains accrued after fall under the new rules. For shares held across the changeover, transitional rules apply: a valuation at 30 June 2027 establishes a notional cost base for the pre-changeover gain, with the 50% discount applying to that portion.

The small business CGT concessions (active asset, 15-year ownership exemption, retirement exemption, 50% active asset reduction) remain available and unchanged. For founders eligible at exit, these can materially reduce or eliminate CGT.

Where the two changes intersect: the founder exit

The CGT and trust changes individually are substantial. Combined on an exit through a trust, they compound.

Worked example. A founder holds 100% of their startup shares in a discretionary trust. They sell the company for $5,000,000 in 2029 with a near-zero cost base. The capital gain on disposal flows to the trust.

Under current rules (pre-1 July 2027): the trust receives the $5,000,000 gain, applies the 50% discount, distributes $2,500,000 of taxable gain to the founder at 47% marginal rate. Tax of approximately $1,175,000. The founder keeps roughly $3,825,000.

Under the new rules (post-1 July 2028, no carve-out): the trust receives the $5,000,000 gain with near-zero indexation benefit. The 30% trustee minimum tax applies first ($1,499,000), then the founder receives the distribution with a credit for the trustee tax, paying top-up tax to reach their 47% marginal rate. Total tax: approximately $2,349,000. The founder keeps roughly $2,651,000.

Combined effect: about $1,175,000 of additional tax on the same exit. The founder’s after-tax outcome moves from $3.83m to $2.65m. The dollar increase is almost entirely driven by the CGT change (the loss of the 50% discount), not the trust change. The trust change becomes the mechanical vehicle for the new tax outcome, rather than the additional cost on top.

Where you sit right now

You already have a trust holding your startup shares. This is where most founders sit. The trust itself doesn’t disappear and doesn’t become useless, but it changes from a tax-efficient vehicle into a roughly tax-neutral one. With 30% now captured at the trust level, the benefit of streaming to lower-taxed beneficiaries is gone. Bucket company strategies are gone too. If the CGT consultation doesn’t produce a startup carve-out, the CGT discount on exit is also gone.

The takeaway:

• Nothing changes until 1 July 2027. Current rules apply through FY27.
• If you’re the sole or major beneficiary on the top marginal rate, the trust change itself doesn’t shift your total tax. The flow-through mechanism is unchanged. The dollar pain comes from CGT, if a carve-out doesn’t land.
• The rollover window runs 1 July 2027 to 30 June 2030 for restructuring out of a discretionary trust without CGT consequences. How you might use that window depends on where the CGT consultation lands. Wait and watch.

If you’re approaching an exit, timing matters

Gains accrued before 1 July 2027 keep the 50% discount. If you are in a sale process now and can realistically complete before 30 June 2027, the difference in after-tax outcome is material (in the $5m exit example above, roughly $1.2m). This is not a reason to rush a bad sale or accept terms you wouldn’t otherwise take, but it is a reason to be deliberate about timing if your buyer relationship and valuation allow it.

If you’re setting up a new company and wondering whether to still use a trust, we have a separate piece on that question.

This is general information, not advice. The rules above are technical, the legislation is not yet drafted, and the right move depends heavily on your specific situation. Structural decisions in particular should not be made based on a general article.