Treasury has proposed a three-year window to ease the shift away from discretionary trusts. Whether that window is practically workable is a separate question from whether it exists.
Treasury's Consultation Paper proposes a federal capital gains tax rollover from 1 July 2027 to 30 June 2030, giving families a defined window to restructure out of a discretionary trust without triggering a federal CGT liability on the transfer.
As set out in our Minimum Tax analysis, that relief doesn't extend to State transfer duty — so for trusts holding real property, the federal window can open a restructuring path that a State duty bill immediately closes again.
The rollover isn't as flexible as it might first sound. To qualify, a trust generally has to transfer all of its assets out of the discretionary structure within the window, not just the one asset causing the family concern. There are only a few narrow exceptions: assets that genuinely can't be transferred, primary production assets, amounts needed to pay off debts or wind-up costs, and assets worth $1,000 or less. A family that wants to restructure a single valuable property while keeping the rest of the trust as it is doesn't qualify for the rollover on those terms.
The rollover also can't be combined with the separate election mechanism introduced in the Exposure Draft. A trust has to choose one path or the other; it can't use part of each.
Three years sounds like a reasonable amount of time on paper, but the practical bottleneck isn't the calendar, it's capacity. If a meaningful share of Australia's discretionary trusts decide to restructure within the same three-year window, that's a simultaneous, nationwide surge in demand for accountants, lawyers, valuers, and State revenue office processing, all working through broadly the same kind of transaction at the same time. Professional advice and State assessment already take time in ordinary circumstances; a genuine national wave of restructuring is a different scale of problem.
There's also a coordination gap sitting underneath the whole timeline. As set out in our Minimum Tax analysis, the federal rollover says nothing about State transfer duty. If Commonwealth and State governments haven't reached a coordinated position on duty relief before the window opens, families can find themselves with federal tax relief available in principle, but a State duty bill still standing in the way in practice, for a window that's already ticking down.
A longer window doesn't fix a coordination problem, it just gives a family more time to wait for a problem that federal legislation alone can't solve. Our primary recommendation, coordinated Commonwealth–State restructuring relief through National Cabinet, is aimed at that underlying issue directly. Once genuine coordination between the Commonwealth and the States is actually in place, the separate question of whether three years is long enough becomes much easier to answer, and considerably less urgent.
