Business owners considering a restructure may be focused on the tax benefits of moving from a trust to a company, but there is another cost that can be easy to overlook: stamp duty.

With new federal tax changes affecting discretionary trusts from 1 July 2028, some Australian businesses may consider restructuring their affairs before the new rules take effect. The Federal Government has announced expanded rollover relief for businesses that choose to restructure, but that relief does not automatically eliminate state and territory taxes such as stamp duty.

In this episode of The CEO Breakdown, Latitude Accountants CEO John Saade discussed the potential conflict between federal tax reform and state stamp duty. His key concern is straightforward: a restructure that appears tax-effective at the federal level could still create a high cost at the state level.

For business owners, this means restructuring should never be viewed as simply a matter of changing the entity on paper. The assets being transferred, the state in which they are held and the applicable duties all need to be considered.

Why Are Businesses Considering Restructuring?

From 1 July 2028, the Australian Government plans to introduce a 30% minimum tax rate on discretionary trusts, subject to the proposed exemptions and final legislation. The Government has also announced three years of expanded rollover relief from 1 July 2027 to support businesses and others that choose to restructure out of discretionary trusts.

This does not mean every business using a trust needs to move to a company.

Trusts can continue to have legitimate uses, including asset protection and succession planning, and the Government has stated that the reform is not intended to prevent their use for legitimate purposes.

However, business owners may want to review whether their existing structure remains appropriate as the tax environment changes.

A restructure could involve:

• Moving a business from a discretionary trust into a company
• Transferring business assets to another entity
• Changing the ownership structure of property
• Reviewing how future income will be distributed
• Considering the long-term tax and succession implications of the existing structure

The important point is that federal rollover relief does not necessarily mean the entire restructure is free of tax and government charges.

How Stamp Duty Can Affect a Business Restructure

Stamp duty is generally imposed by state and territory governments, rather than the Federal Government. This creates a potential problem when federal tax reforms encourage restructuring, but state taxes continue to apply to certain transactions.

As John Saade explained in The CEO Breakdown, the rules can vary significantly depending on where a business operates and what assets are involved.

For example, some jurisdictions can impose duty on transactions involving land and property, while Queensland and Western Australia can also have broader duty implications for certain business assets.

This means a business owner could potentially receive federal rollover relief while still facing a substantial state-based duty liability.

Property Can Create Significant Restructure Costs

If a discretionary trust owns valuable property, transferring that property into a company may trigger state or territory stamp duty depending on the circumstances and applicable exemptions.

For a business holding commercial property, development land or other significant real estate, this can turn what appears to be a straightforward restructure into a major financial decision.

The higher the value of the property, the greater the potential duty exposure can become.

Business Assets May Also Matter

The issue is not necessarily limited to real estate.

As highlighted in John’s discussion, Queensland and Western Australia have rules that can potentially apply stamp duty to certain business assets, whereas other jurisdictions generally focus more heavily on land and property transactions.

This creates an important consideration for businesses operating across Australia.

Two businesses with similar assets and structures could potentially face very different restructuring costs simply because they operate in different states.

Why Federal Tax Relief Does Not Automatically Remove Stamp Duty

The Federal Government’s proposed rollover relief is designed to reduce the income tax and CGT consequences of eligible restructuring. Treasury says the expanded relief will apply for three tax years from 1 July 2027.

However, state governments administer their own duties.

This creates a situation where:

Federal reform → encourages restructuring

while:

State stamp duty → may increase the cost of restructuring

That distinction is crucial for business owners.

A restructure therefore needs to be assessed from both perspectives before any assets or ownership interests are transferred.

The Potential Cost of Getting It Wrong

Stamp duty can become particularly significant when valuable assets are involved.

For example, consider a business that owns:

• Commercial property
• Development land
• Investment property
• Other valuable business assets
• Multiple entities or ownership interests

If those assets need to move as part of a restructure, the potential duty should be assessed before the transaction takes place.

The cost may be far greater than the accounting or legal fees associated with changing the structure itself.

This is why business owners should avoid treating restructuring as a simple administrative exercise.

A Restructure Should Start With the Numbers

Before deciding whether to move from a trust to a company, business owners should consider:

1. What assets does the existing entity own?
2. Where are those assets located?
3. What is their current market value?
4. Could the proposed transfer trigger stamp duty?
5. What federal tax relief may be available?
6. What CGT consequences could arise?
7. Will the new structure provide a genuine long-term benefit?
8. What are the ongoing accounting, tax and compliance costs?

The answer should be based on the overall financial outcome rather than simply the headline tax rate.

Is Stamp Duty Becoming a Bigger Issue for Australian Businesses?

John Saade’s broader criticism in the CEO Breakdown is that transaction-based taxes can discourage people and businesses from making economically sensible decisions.

A business owner may want to move from an inefficient structure to a more appropriate one, but a large upfront stamp duty bill could make that decision much harder.

The same principle can apply to property owners who want to downsize or move property.

From a business perspective, the challenge is that stamp duty can become an upfront cost at exactly the point when an owner is trying to improve the efficiency of their structure.

There is also a broader policy debate about whether state governments should rely less on transaction-based stamp duties and more on recurring land-based taxes. However, until any such reforms occur, businesses need to work within the rules that apply in their particular jurisdiction.

What Should Business Owners Do Before Restructuring?

If your business operates through a discretionary trust, now is a good time to review the structure rather than waiting until the 2028 changes are closer.

A review should consider both the proposed federal trust tax changes and the potential state-based costs of restructuring.

Importantly, do not transfer assets simply because a new tax rule makes another structure appear more attractive.

The right structure depends on your business, assets, income, ownership arrangements, succession plans and long-term goals.

Professional advice can help determine whether restructuring is worthwhile and, if it is, how the transition should be planned.

Frequently Asked Questions About Business Restructuring and Stamp Duty

Does moving from a trust to a company trigger stamp duty?

It can, depending on the assets being transferred, the state or territory involved and whether an exemption or concession applies. Property and certain business assets can create significant duty considerations.

Will the new trust tax automatically mean I should move to a company?

No. The proposed 30% minimum tax on discretionary trusts does not mean every trust should be replaced. Trusts can still have legitimate purposes, and the appropriate structure depends on individual circumstances.

Does federal rollover relief eliminate stamp duty?

Not necessarily. Federal rollover relief is designed to address eligible federal income tax and CGT consequences. State and territory stamp duty is a separate consideration.

When does the new discretionary trust tax start?

The Government has announced that the 30% minimum tax rate for discretionary trusts is proposed to apply from 1 July 2028, subject to the final legislation and applicable exclusions.

Should I restructure my business before 1 July 2028?

There is no universal answer. Business owners should assess their existing structure, assets, potential tax consequences, stamp duty exposure and long-term objectives before making a decision.

Get Professional Advice Before Restructuring Your Business

Business restructuring can create significant tax and financial consequences, particularly when property and other valuable assets are involved.

At Latitude Accountants, we help Australian business owners understand their numbers, review their existing structures and make informed decisions about tax and business planning.

If you are considering moving from a trust to a company or reviewing your business structure ahead of the upcoming tax changes, speak with the Latitude Accountants team before making any transfers.

Latitude Accountants

📍 Sydney Olympic Park | Marrickville | Melbourne | Loxton
📞 1300 706 597
📧 info@latitudeaccountants.com.au

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Disclaimer

This article provides general information only and does not constitute financial, tax, legal or property advice. Stamp duty and restructuring rules vary between Australian states and territories and may change as legislation is introduced or amended. Speak with a qualified accountant, tax adviser or legal professional about your specific circumstances before restructuring a business or transferring assets.