The Solution · what we are asking Parliament for
We are not asking Parliament to abolish Family Trust Distribution Tax. It still has a job to do against deliberate schemes. We are asking for the two protections that almost every other tax already has, and we need both. A time limit on its own still crushes a recent honest mistake. A discretion on its own leaves thirty years of paperwork open forever.
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Two changes · both essential
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After a set period, a family trust distribution can no longer be taxed, just like other income tax assessments. Fraud and evasion stay open forever, as they do now.
Every other tax mistake expires. This one should too.
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The Tax Office can waive or reduce the tax where a distribution was an honest mistake that gave nobody a tax benefit and the income tax was paid.
The Tax Office says it has no discretion. Parliament can give it some.
Why both
A time limit alone leaves a family caught for a slip made three years ago paying the top rate, twice, on the same income.
A discretion alone still lets the Tax Office open 1995 in 2026, and asks families to find records nobody had to keep.
And two guarantees
The interest discount on offer today excludes them.
Not a temporary offer with a deadline.
The drafting · for discussion
A plain-English drafting note so advisers, MPs and Treasury can test the idea. It is a starting point for Parliamentary Counsel, not final wording.
C1 · C2 describe the current law. The proposal is the campaign’s own.
Schedule 2F · Income Tax Assessment Act 1936
Proposed amendments · drafting note · October 2026
(1) The Commissioner may not assess an amount of family trust distribution tax more than four years after the end of the income year in which the distribution was made.
(2) Subsection (1) does not apply if the Commissioner is of the opinion that there has been fraud or evasion.
(1) The Commissioner may remit all or part of an amount of family trust distribution tax, and any general interest charge on it, if satisfied that: (a) the distribution arose from an inadvertent error; and (b) no person obtained a tax benefit as a result.
These amendments apply to any amount of family trust distribution tax that is unpaid at commencement, including amounts under audit.
Why now
The Government’s exposure draft on a minimum tax for discretionary trusts means trust law is back on the table. The fix can travel with it.
Done
18 Sep 2026
Treasury consultation on the minimum tax exposure draft closed.
Deadline
30 Jun 2027
The Tax Office’s interest discount ends. The penalty tax never does.
The window
Next sitting
The trust bill is introduced. We ask MPs to amend it.
The profession has raised the same problem
CA ANZ
CPA Australia
Institute of Public Accountants
National Tax & Accountants’ Association
The Tax Institute
Listed as authors of the joint submission. They are not members of, or endorsers of, this campaign.
For advisersAccountants, tax agents and lawyers asking Parliament for both changes.
Sign the letter →Hard questions, straight answers
No. In the cases we are talking about, the income stayed in the family and the income tax on it was paid. Fraud and evasion would stay open with no time limit, and the discretion only covers honest mistakes where nobody gained a tax benefit. Deliberate schemes are still caught.
No, and the Tax Office has never called it one. What is on offer, until 30 June 2027, is a discount of up to 80% on the interest, decided case by case, and only for trustees who self-review and pay in full before an audit starts. It does nothing to the penalty tax, which is the top rate charged a second time on income already taxed, and which on its own can wipe a family out. All it discounts is interest on a debt that nobody, including the Tax Office, knew existed. C12
Because each only fixes half the problem. A time limit alone still taxes a recent honest slip twice at the top rate. A discretion alone still lets 1995 be reopened in 2026. Families need both.
We have asked Treasury to publish its estimate. Until it does, we will not claim a figure either way.
We are asking for it to apply to any amount that is unpaid when the change starts, including families already under audit.
Two changes
