Treasurer Jim Chalmers has softened Labor's planned 30 per cent minimum tax on discretionary trusts, introducing exemptions after pushback from business groups, farmers and family-owned companies. Draft legislation released on Thursday allows charities, deductible gift recipients and tax-exempt bodies such as sporting clubs to avoid the levy, while trusts established before July 2028 can opt into a new fixed-distribution system to sidestep the tax without restructuring. The move matters because it significantly narrows the reach of a measure originally forecast to raise $44.9 billion over nine years, though the government has not published a revised revenue estimate.

Treasury will also widen the definition of a "fixed trust" to exclude commercial structures such as bare trusts and managed investment trusts, and is offering three years of capital gains tax rollover relief from July 2027 for those who do restructure. Uncertainty remains over whether state governments could still impose stamp duty on asset transfers, raising the possibility of future friction between Canberra and the states. Treasury estimates roughly 350,000 small businesses operate through discretionary trusts, of which about 140,000 are unlikely to face extra tax or need to restructure in any given year; a two-week consultation period is now open before final legislation goes to Parliament.