Since the proposed minimum tax on discretionary trusts was first announced, Mission Advisory has been actively engaging with Government and the charitable and not-for-profit sector about one issue in particular: genuine distributions to charities and community organisations should not be unintentionally caught by the new tax.
That position has remained consistent throughout the consultation process.
Importantly, the exposure draft legislation released by the Government included an exclusion for trust income distributed to registered charities, deductible gift recipients (DGRs) and other income tax-exempt entities. Mission Advisory welcomed this as a positive development and an important recognition of the role discretionary trust distributions can play in supporting community organisations.
This is great news because it means tax effective giving through trusts can continue.
Our advocacy, however, did not stop there.
As the proposal has moved from consultation, to exposure draft legislation, and now to Parliament, Mission Advisory has continued to make submissions aimed at ensuring the final legislation protects genuine charitable giving while maintaining appropriate integrity safeguards.
Our submission on the exposure draft
On 17 September 2026, Mission Advisory made a further submission to Treasury responding to the exposure draft legislation.
While we strongly supported the exclusion for charities, DGRs and other income tax-exempt entities, our submission identified two areas where we believed the design needed further refinement.
First, we recommended that the Minister's power to impose conditions on the exclusion be limited to procedural, administrative and integrity matters, rather than potentially allowing eligibility to depend on the particular type or purpose of a charity or exempt organisation.
Second, we recommended removing the proposed power to impose a cap on distributions to self-assessing income tax-exempt entities, such as sporting and community organisations. In our view, these are legitimate not-for-profits already operating within an existing integrity framework, and imposing a cap could create an unnecessary distinction between different types of community organisations
The underlying principle was simple: if the purpose of the exclusion is to ensure the new tax does not discourage charitable and community giving, its design should provide certainty and equitable treatment for genuine exempt organisations.
The conversation then shifted to private school fees
More recently, concern has been raised about whether the charitable exclusion could potentially be manipulated in connection with private school fees.
Mission Advisory agrees that arrangements designed to convert a trust distribution into a private benefit should not be encouraged. But we do not believe the answer is to remove or broadly narrow an exclusion that protects legitimate charitable and community giving.
Our submission to the Senate Economics Legislation Committee on 26 October 2026 therefore recommends retaining the charitable exclusion while strengthening the mechanisms available to identify and address contrived arrangements.
Under existing tax law, provisions including section 100A and Part IVA can already apply to arrangements involving private benefits or arrangements entered into for the purpose of obtaining a tax benefit. Our submission argues that the practical challenge is therefore one of detection and enforcement. Misuse of provisions by a few, should not justify the removal of the charitable exclusion. Removing the exclusion would effectively punish charities and the not for profit sector because of minority misconduct.
Protect the giving. Target the misuse.
Our latest submission recommends a proportionate approach.
Retain the charitable exclusion. Genuine distributions to registered charities, DGRs and other income tax-exempt entities should continue to be protected.
Strengthen trustee reporting. We have proposed that trustees separately identify income tax-exempt beneficiaries in the trust statement of distribution and confirm whether any private benefit, such as reduced fees, goods, services or rebates, is linked to the distribution. This would provide the ATO with additional information to support data matching and enforcement.
Preserve the exposure draft design position. Consistent with our September submission, we continue to recommend limiting the Minister's condition-making power to procedural, administrative and integrity matters and removing the proposed cap on distributions to self-assessing exempt entities.
Why this still matters
Treasury has estimated that discretionary trust distributions account for less than 5% of total charitable giving. Applied to the $14.8 billion in donations and bequests reported by Australian charities for 2024, Mission Advisory's latest submission calculates that up to $740 million each year may flow from discretionary trusts to charities and community organisations.
For many families and businesses, distributions through discretionary trusts are one of the ways they support the organisations and causes that matter to them. Genuine distributions of this kind leave the family group and are directed towards charitable or community purposes.
That is why we believe the distinction matters.
There should be strong safeguards against arrangements designed to create a private benefit. At the same time, those safeguards should not inadvertently reduce genuine funding reaching charities, churches, sporting clubs and other community organisations.
The goal should be to target the misuse, without discouraging the giving.
As the proposed reforms continue through the legislative process, Mission Advisory will continue advocating for an outcome that maintains the integrity of Australia's tax system while protecting genuine generosity and the organisations that depend upon it.
Understanding how the changes may affect your trust, business or charitable giving can be complex. Mission Advisory is here to help you navigate the detail and consider what it may mean for your circumstances. If you would like to discuss the proposed changes, or how they may affect the way you structure your affairs and support the organisations that matter to you, we welcome you to get in touch with our team.