NSW Labor has pledged to introduce stamp duty relief for discretionary trusts that use the Federal Government’s proposed Excluded Election Trust pathway, if it is returned to government at the March 2027 state election.
The proposal is intended to remove uncertainty about whether opting into the federal transitional arrangement could trigger NSW transfer duty.
Under the commitment, NSW regulations would be amended so that a trust’s initial decision to become an Excluded Election Trust would not be treated as a taxable event.
What Is an Excluded Election Trust?
The Federal Government proposed the Excluded Election Trust option as part of its planned minimum tax on discretionary trusts, which is intended to begin from 1 July 2028.
Under draft federal legislation released in September, eligible discretionary trusts could elect to make fixed distributions to nominated beneficiaries rather than remain subject to the proposed minimum tax rules.
The Commonwealth says this option is designed to avoid the need for businesses to restructure their trusts and is not expected to trigger state or territory stamp duties.
However, the final federal legislation has not yet passed Parliament.
NSW Proposal Would Add State-Level Protection
NSW Labor says it would establish a state-level rollover relief mechanism to give trusts additional certainty under NSW tax law.
The proposed change would clarify that making the initial EET election would not, by itself, create a transfer duty liability.
This matters because changes to trust arrangements can sometimes become dutiable in NSW where they involve a change in beneficial ownership, a declaration of trust or other dealings with dutiable property.
Not every variation to a discretionary trust is currently subject to duty, and Revenue NSW already distinguishes between administrative changes and changes affecting beneficial ownership.
Details Depend on Federal Legislation
The NSW proposal will not be implemented immediately.
Labor says consultation with small business groups and other stakeholders would begin only after the Commonwealth finalises its discretionary trust legislation.
The final NSW rules would therefore depend on the structure of the federal EET scheme and how the Commonwealth defines eligibility, distributions and transitional arrangements.
Federal Trust Reform Still Under Development
The Commonwealth’s broader proposal would introduce a 30 per cent minimum tax on certain discretionary trust income from July 2028, while excluding a range of trusts and income categories.
The draft legislation includes exemptions for arrangements such as charitable trusts, special disability trusts, superannuation funds and certain primary production income.
The EET pathway is one of the options intended to reduce restructuring costs for existing trust users.
Election Commitment, Not Current Law
The NSW stamp duty relief remains a 2027 election commitment.
No NSW regulations have yet been changed, and businesses considering changes to existing trust structures remain subject to current NSW duty rules.
If Labor is re-elected and the federal legislation proceeds, the state government says it would then consult on the detailed design before introducing the relief.