The Government's Trust Tax Reform and What It Means for Wage Earners
From July 2028, discretionary trusts face a 30% minimum tax. Here's what the Treasury announcement means for PAYG employees and novated leasing. Read more.
On 8 July 2026, the Treasury released a consultation paper on implementing a minimum 30% tax on discretionary trusts, effective from 1 July 2028. The stated aim, according to the Treasury Ministers announcement, is to more closely align the tax rate on trust income with the rates paid by ordinary wage earners.
In plain English: if you're a PAYG employee who can't distribute income through a family trust, the Government is saying the system should be fairer — and they're funding income tax cuts for workers partly through this measure. That's the pitch, anyway.
What this means for novated lease customers
If you're a salaried employee, you've never had access to the income-splitting benefits that discretionary trusts can provide. Your tax obligations are largely set — you pay what you pay. What you can control is how you structure your pre-tax spending.
Novated leasing is one of the few tax-efficiency tools genuinely available to PAYG workers. By running your car costs through a novated lease, you pay for the vehicle and its running costs from pre-tax salary, which reduces your taxable income. According to the same Treasury reform package, income tax cuts for workers are part of the broader agenda — meaning your marginal rate may shift over coming years, and the pre-tax benefit of novated leasing adjusts accordingly.
The trust reform itself doesn't directly change how novated leasing works. But it's a reminder that the tax advantages available to wage earners are narrower than those available to people with more complex structures — and novated leasing remains one of the clearest, most accessible ones on the table.
Common questions
Does the discretionary trust minimum tax affect my novated lease?
No. The 30% minimum tax applies to trustees of discretionary trusts from 1 July 2028. Novated leasing is an employer-employee salary packaging arrangement and is unaffected by this change.
Why is Treasury talking about trust reform alongside income tax cuts?
According to the Treasury Ministers consultation paper, revenue raised from aligning trust tax rates with worker tax rates is intended to help fund further income tax cuts for PAYG employees. The two measures are part of the same reform package.
Will the income tax cuts improve my novated lease savings?
Potentially. Novated leasing saves you money based on the difference between your marginal tax rate and the FBT rate. Changes to income tax rates can affect that calculation — your millarX consultant can model the impact for your specific situation.
When does the trust minimum tax actually start?
The proposed start date is 1 July 2028. A consultation paper has been released but legislation has not yet passed. The rules could change before then.
Is novated leasing still worth it for PAYG employees given all these tax changes?
For most PAYG employees — especially those considering an electric vehicle — novated leasing remains one of the most accessible pre-tax benefits available. The fundamentals haven't changed with this announcement.