Sep 7, 2026 Joel Hernandez

Tax relief for Charity distributions from Trusts

After significant concern regarding the negative impact on charities of the Federal Government’s proposed 30% minimum tax on Trusts, and submissions from various parties including RDL, the Federal Treasurer recently released draft legislation to address this issue.

Under the present tax laws, Trusts can distribute to charities out of pre-tax dollars whereas under the proposed new rules Trusts would be required to pay 30% tax on all income, with a reduced balance being available for distribution to a charity.

The Treasurer’s announcement accompanying the release of the draft legislation stated that the draft legislation ensures that all distributions from trusts to registered charities and deductible gift recipients (DGRs) will be exempt from this tax. Distributions to other income tax‑exempt entities like sporting clubs will also be exempt, up to a reasonable cap to be finalised following consultation.

While this is a welcomed improvement, the measure is yet to be enacted as law.