This year may also mark the beginning of the end for one of the more well-known strategies in Australian tax planning: the bucket company. A bucket company is simply a private company used as a beneficiary of a discretionary trust, designed to capture trust income at the flat 25–30% corporate tax rate rather than having it flow through to individual beneficiaries at higher marginal rates.

The Government’s proposed 30% minimum tax on discretionary trust income if legislated would largely remove this benefit. Under the proposed rules, corporate beneficiaries would not receive a credit for tax already paid at the trustee level, creating the potential for layered taxation that makes the structure far less attractive, or in some cases actively counterproductive.

No legislation has passed yet, and the proposal is subject to consultation. With the changes flagged to apply from 1 July 2028, the 2025–26 and 2026–27 financial years are likely the last two in which the bucket company strategy operates freely in its current form. If you are currently using this structure, it is worth discussing with us whether any adjustments are appropriate before the rules change.

If your family or business affairs include a discretionary trust, we need to finalise your distribution resolution before 30 June, this is a hard deadline with no exceptions. Please contact us as soon as possible so we can work through your trust’s distribution strategy together.

t: +61 7 3177 4120
e: advisors@hksrussell.com

Posted on June 15, 2026 by Charisse Russell - Articles