Federal Budget 2026-2027: State taxes snapshot: look before you leap into a restructure
The 2026-27 Federal Budget announced a number of significant tax measures. As the detail emerges, many taxpayers will re‑evaluate the role of trusts in their investment and business structures and consider whether assets should be held in other entities (such as companies) or personally.
However, federal income tax is only one part of the picture. State and Territory taxes, particularly transfer duty and land tax, can materially affect the cost and viability of any restructure and should be considered before any steps are taken.
Key takeaways
- Consider State and Territory taxes alongside federal income tax outcomes when assessing the impact of the Federal Budget measures.
- Do not assume that any federal income tax rollover relief will eliminate transfer duty. A restructure may be duty and land tax inefficient.
- Obtain advice before implementation. Timing, sequencing and documentation can be critical to accessing any concessions.
Transfer duty on restructures
The Federal Government has indicated that capital gains tax rollover relief will be available for certain taxpayers seeking to transition assets out of existing trust structures (subject to consultation and legislation). Even where income tax rollover relief is available, the transfer of assets may still trigger State or Territory transfer duty. For example, transfers from discretionary trusts to companies are commonly ineligible for duty concessions or exemptions. In short, don’t assume an income tax rollover translates to a duty‑free transfer.
Depending on the jurisdiction and the nature of the trust and beneficiary, in‑specie distributions of dutiable property from trusts may attract concessional or exempt duty treatment in limited circumstances, including (in some cases) distributions to corporate beneficiaries. Where a corporate reconstruction concession is unavailable, these pathways can sometimes provide an alternative (provided eligibility criteria are met and documentation and timing are carefully managed).
The main asset classes of concern are land and land interests (including interests in landholding entities). For taxpayers operating a business through a trust, particular attention should also be given to transfers of business assets (including goodwill) located in, or referable to, Queensland and Western Australia, as these are jurisdictions where transfers of business assets can still be subject to duty.
Beyond duty: other State taxes consequences
Restructures can also trigger State taxes consequences beyond the immediate duty cost.
For example, moving land into companies or corporate groups may increase land tax. In many jurisdictions, land held in discretionary trusts may be assessed on a different basis to land held by related companies. Companies under common ownership, or that form part of a corporate group, can have landholdings assessed to land tax on an aggregated basis – leading to a higher land tax bill.
Victoria provides further examples. Land may carry deferred liabilities, such as the Growth Areas Infrastructure Contribution (GAIC) or windfall gains tax liabilities, which can become payable on certain dealings, including some transfers. In addition, transferring commercial or industrial land may have unintended consequences under Victoria’s commercial and industrial property tax (CIPT) regime. Separate issues can also arise for holiday homes and other residential properties where exemptions (for example, from vacant residential land tax) may be lost if ownership changes.
The 2026-27 Federal Budget delivers significant changes across the Australian economy – but what do they mean for your business, sector and future planning? Our experts outline the key announcements and what the Budget means for you and your business.
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