Trust Tax Reform 2028: What PAYG Workers Need to Know
Treasury is consulting on a 30% minimum tax on discretionary trusts from July 2028. Here's what it means for PAYG employees and novated leasing.
The Federal Government has released a consultation paper on a new minimum 30% tax on discretionary trusts, set to take effect from 1 July 2028. According to the Treasury Ministers announcement [[Source 1]](https://ministers.treasury.gov.au/ministers/Jim-Chalmers-2022/all/Consultation-on-discretionary-trusts-reform-implementation), the policy is designed to better align the tax rate on trust income with the rates paid by ordinary PAYG workers.
In plain terms: if you earn a wage, you've never had the option to split your income through a trust to reduce your tax bill. This reform is the Government's attempt to close that gap. The stated goal is also to help fund further income tax cuts for workers — the same workers who've been playing by the rules all along.
What this means for novated lease customers
If you're a PAYG employee, this reform doesn't directly change how your pay is taxed today. But the broader direction of policy matters. The Government's framing is explicit — according to the Treasury consultation paper [[Source 1]](https://ministers.treasury.gov.au/ministers/Jim-Chalmers-2022/all/Consultation-on-discretionary-trusts-reform-implementation), closing trust loopholes is intended to fund income tax cuts for workers. That means the tax environment for salary-packaged employees could improve over the coming years.
Novated leasing already works because it reduces your taxable income — you pay less income tax and less GST on a vehicle. As income tax cuts materialise for PAYG earners, and as the Government continues to signal that wage-earners deserve a fairer deal, salary packaging arrangements like novated leases remain one of the most accessible, legitimate tax-efficiency tools available to ordinary employees. The key takeaway: if you're a PAYG worker, you're already playing by the rules. Novated leasing is one of the few strategies built specifically for you.
Common questions
Does the 30% minimum trust tax affect my novated lease?
No. Novated leasing is a salary packaging arrangement between you, your employer and a finance provider. It is unrelated to discretionary trusts and is not affected by this reform.
When does the minimum trust tax start?
The Government proposes the minimum 30% tax on discretionary trust income will apply from 1 July 2028. Consultation on implementation details is currently underway.
Why is the Government doing this?
According to the Treasury consultation paper, discretionary trusts allow some people to manage their tax affairs in ways unavailable to most Australians. The reform aims to align trust tax rates more closely with the rates PAYG workers pay, and to help fund further income tax cuts for workers.
Will there be income tax cuts for PAYG workers?
The Government has stated this reform is part of a broader tax package that includes income tax cuts for workers. Specific details and timing are subject to the legislative process — watch the Treasury website for updates.
How does novated leasing reduce my tax as a PAYG employee?
A novated lease lets your employer deduct vehicle payments from your pre-tax salary, reducing your taxable income. You also avoid GST on the purchase price. The potential savings depend on your income, vehicle choice and lease terms — our calculator gives you a personalised estimate.