Does the 2028 trust tax affect a family trust that owns farmland?

Written September 2026. The trust tax is still in draft and isn't yet law.

In the May Budget the government announced a minimum 30% tax on discretionary trusts, starting 1 July 2028. For farming families the headline that followed was relief, because primary production income is excluded.

That's true, and it matters. It's also where a lot of families will stop reading, and I think that's a mistake.

The announcement

Tax would be paid at the trustee level at a minimum rate of 30%. Beneficiaries who aren't companies would get a credit for that tax, but the credit is non-refundable, so a beneficiary on a lower rate can't get the difference back. That's the point of the measure: it takes most of the benefit out of distributing to family members on low tax rates.

There's also a rollover, open from 1 July 2027 to 30 June 2030, that gives income tax relief when a family moves a trust's assets into another structure. Stamp duty and other taxes still apply, and in general every required asset has to go to one new entity inside the window. Treasury released an exposure draft on 3 September 2026, so the details can still change.

The exclusion

Primary production income is excluded from the minimum tax. The trouble is how much of a modern farming family's income isn't primary production income.

Income from farm stays, a cellar door, a livestock transport business, or a wind or solar project on the back paddock is likely to be caught. So is income from anything the trust holds off the farm: shares, term deposits, a commercial property in town. A trust that mostly farms but earns something on the side may find those two parts taxed differently, and working out which dollar is which becomes its own job. (I've learned to be wary of any tax change summed up as "farmers are exempt". It's rarely the whole story.)

There's also the land itself. Accounting firms reviewing the Budget have noted that restructuring may still be needed where farmland sits in a discretionary trust, even with the exclusion. How gains on that land are treated, and how the trust tax fits with the capital gains tax changes that became law in June and start on 1 July 2027, is still being worked through.

Three paths

The exposure draft leaves an existing family trust with three broad options. It can stay as it is and pay the minimum tax on whatever isn't excluded. It can restructure into another entity using the rollover. Or the trustee can make a fixed-entitlement election, nominating the beneficiaries and a fixed percentage of income and capital for each, then distributing in exactly those proportions every year. It's one path or the other, because a trust that uses the rollover can't then make the election.

The election looks like the tidy way out, and for some families it may be. What isn't settled yet is whether making the election could itself trigger state stamp duty on land the trust holds, which is the very cost it's meant to avoid. The government has said it doesn't expect that to happen, but the answer sits with each state's duty law, and tax advisers have raised concerns.

The election can also only be made in the 2028–29 income year, and once made it can't be varied except on a death or a relationship breakdown. If the trustee revokes it, the minimum tax applies from then on. If a year's distributions don't match the nomination, the trustee is taxed on all of that year's income at 47%.

Succession first

That's where succession comes back in. An election made in 2028 fixes who benefits from the trust, and in what shares, before many families have settled who's taking the farm on. A grandchild born later, a sibling who comes home, or a child who wants out can't be accommodated. A restructure through the rollover can lock in an ownership shape just as firmly, and undoing either later can cost duty and tax a second time.

So before any of it, I'd want to know who's going to own the farm next. The order matters: settle who gets what, then choose the path and the structure that carry it.

What it means

If your family trust holds the farm and not much else, the direct effect may be small. If it earns income from anything off the farm or alongside it, it's worth mapping each income stream against the exclusion well before 2028. And if succession hasn't been settled, the rollover window and the one-year election deadline give the family a reason to settle it.

Your land. Your legacy. Looked after.