Small Business Trusts Face 30 Percent Minimum Tax Despite Modest Incomes, Inquiry Hears

Half of small businesses operating through family trusts earn under $74,700 annually, yet they may face a new minimum tax rate of 30 percent. The Australian Chamber of Commerce and Industry (ACCI) argues these reforms could discourage business creation and investment. The government’s stated aim for the tax changes is to prevent individuals from paying less tax than wage earners by distributing income to relatives in lower tax brackets.

• Half of small businesses run through family trusts earn less than $74,700 annually.
• These businesses could face a minimum tax rate of 30 percent under proposed government changes.
• The ACCI believes the reforms will deter people from starting, investing in, and operating businesses.
• The government aims to stop income splitting to avoid higher tax rates, ensuring those with distributed income pay at least as much tax as wage earners.