You’ve built something. The business is profitable. Now comes the question every founder eventually faces: how do I actually get money out of this thing — and how much of it do I keep?
The 2026 Federal Budget just made this question more urgent. If you hold your business or investments through a discretionary trust — and most Australian founders do — a new 30% minimum tax on trust distributions is coming in 2028. At the same time, the CGT discount you were probably counting on for your eventual exit is being abolished from 2027.
This article is about profit repatriation: the strategies available to get money out of your business efficiently, and why the planning window to do it under the current rules is closing.
What we mean by ‘profit repatriation’
Taking profits out of your business or trust and putting them in your personal hands — or into structures like superannuation or a family trust — in a way that minimises tax. This includes dividends, trust distributions, salary, and director loans (done correctly).
The Current Landscape — How Founders Typically Extract Profits
Most Australian founders use one or more of the following methods. Each has a different tax profile, and the 2026 budget affects them differently.
1. Salary or Director’s Fees
The simplest approach. You pay yourself a salary from the company or trust. It’s deductible to the entity and taxed as income in your hands at your marginal rate — up to 47% at the top end.
| Factor | Detail |
|---|---|
| Tax rate | Up to 47% (top marginal rate + 2% Medicare levy) |
| Super guarantee | 11.5% SG applies — can also make voluntary contributions |
| Simplicity | High — straightforward payroll |
| Budget impact | None directly — salary rules unchanged |
| Best for | Founders who need regular income; also satisfies SG obligations |
Key point: Salary is efficient up to around $135k–$190k for most founders (where super contributions become more valuable). Beyond that, the marginal rate makes salary increasingly expensive relative to other methods.
2. Dividends (from a Company)
If your business operates through a company (Pty Ltd), profits can be distributed as dividends. Franked dividends carry a tax credit for company tax already paid — so if your company paid 25% tax (base rate), shareholders get a 25% franking credit.
| Factor | Detail |
|---|---|
| Company tax rate | 25% (base rate, aggregated turnover < $50M) or 30% |
| Franking credits | Offset against personal tax — reduces double taxation |
| Effective rate (top marginal) | ~32–34% on a fully franked dividend from a 25% rate company |
| Budget impact | No direct change to dividend rules — but trust minimum tax affects how profits reach the company |
| Best for | Business owners who want to retain some profit in the company and distribute periodically |
Franking Example
Your company earns $100 profit, pays $25 company tax, retains $75. You receive a $75 dividend with a $25 franking credit = $100 assessable income. At the top marginal rate of 47%, your gross tax is $47 — less the $25 franking credit = $22 additional tax. Total tax on $100 of profit: $47. Compare to salary where $100 of profit = $47 tax with no SG deduction.
3. Trust Distributions (from a Discretionary Trust)
If your business or investments are held in a discretionary trust, the trustee can distribute income each year to any beneficiary — including yourself, your spouse, adult children, or a company beneficiary. This is the most flexible structure for profit repatriation.
| Factor | Detail |
|---|---|
| Flexibility | High — trustee chooses who gets what each year |
| Income splitting | Distribute to lower-income family members to reduce overall tax |
| Company beneficiary | Distribute to a bucket company at 25–30% tax rate |
| Current effective rate (smart planning) | As low as 15–30% with income splitting and bucket company |
| Budget impact — BIG CHANGE | 30% minimum tax on discretionary trust distributions from 1 July 2028 |
| Best for | Families with varying income levels; investment structures |
⚠ This Is the Big One
From 1 July 2028, a 30% minimum tax applies to discretionary trust distributions. Income splitting to low-income beneficiaries below the 30% effective rate will be caught. The window to use the current system at its full efficiency is 2026 and 2027. After that, the tax benefits narrow significantly.
4. Superannuation Contributions
Arguably the most tax-efficient profit repatriation method available — but with annual caps.
| Factor | Detail |
|---|---|
| Concessional (pre-tax) cap | $30,000 per year (FY2026) — employer + personal deductible contributions |
| Non-concessional (after-tax) cap | $120,000 per year |
| Tax rate inside super | 15% on contributions; 15% on investment earnings; 0% in pension phase |
| Carry-forward rules | Unused concessional caps from prior 5 years can be used if balance < $500k |
| Budget impact | Super CGT treatment unchanged — one-third discount retained |
| Best for | All founders — should be maxed before other methods where possible |
For a founder on $200k salary, the gap between a 47% marginal rate and the 15% super rate represents a 32 percentage point tax saving on each dollar contributed. Over a decade, this compounds significantly.
What the 2026 Budget Actually Changes for Profit Repatriation
The Discretionary Trust Minimum Tax — 2028
This is the most direct impact on profit repatriation. From 1 July 2028, any distribution from a discretionary trust will attract a minimum 30% tax. The key implications:
- Splitting to a spouse on a low income — currently taxed at 19% — will be topped up to 30%
- Splitting to adult children — currently taxed at their marginal rate — will be topped up to 30% if below that threshold
- Distributing to a bucket company at 25% — will be topped up to 30%
- Distributing to a beneficiary already on 30%+ marginal rate — no change
What Survives
Fixed trusts, unit trusts and super funds are exempt. Distributions to beneficiaries already paying 30%+ tax are unaffected. The concession for small income earners (pensioners on income support) is also preserved.
The Window: 2026 and 2027
The current trust distribution rules remain fully in force for FY2026 (now) and FY2027. That means two more years to maximise income splitting under the current system before the minimum tax kicks in.
For business owners with profitable discretionary trusts, the priority actions right now are:
- Maximise concessional super contributions for all beneficiaries — before and after the minimum tax, super remains the most efficient vehicle
- Review FY2026 trust distribution resolutions before 30 June 2026 — ensure you are using the full flexibility of the current rules
- Model FY2027 distributions — this is the last year of full efficiency
- Start planning the post-2028 structure now — don’t wait until July 2028 to figure this out
Salary vs Distribution — What Changes After 2028
Pre-budget, a discretionary trust distributing to a low-income beneficiary could achieve an effective rate as low as 0–19%. Post-2028, the floor is 30%. This means the gap between salary and trust distribution narrows considerably at mid-income levels.
| Method | Tax Rate (Before vs After) | Impact |
|---|---|---|
| Distributing to low-income spouse (< $45k income) | 19% now → 30% from 2028 | Efficiency roughly halved |
| Distributing to bucket company (25% rate) | 25% now → 30% from 2028 | 5% point increase |
| Salary to yourself (top marginal) | 47% — unchanged | No change |
| Concessional super contributions | 15% — unchanged | Still the best tool |
| Fully franked dividend from 25% company | ~32–34% effective — unchanged | Becomes more competitive vs trust |
So What Should You Do?
If your business is in a discretionary trust
- Max super contributions NOW — every year, for yourself and your spouse if applicable
- Review your June 2026 trust distribution resolution with your advisor before 30 June
- Model the impact of the 2028 minimum tax on your specific distribution pattern
- Consider whether a bucket company structure still makes sense post-2028 (30% vs 25% — the gap narrows)
- Explore whether restructuring into a fixed or unit trust via rollover relief from July 2027 is appropriate
If your business operates through a company
- The dividend rules are unchanged — but ensure franking credit positions are accurate
- Consider whether retained profits should be distributed now vs post-2028 if held via a trust above the company
- Super contributions remain your most efficient extraction tool
If you are paying yourself primarily via salary
- Nothing changes directly — but consider whether you are optimising super alongside salary
- If you are a high-income earner (> $250k), check whether Division 293 tax is reducing your super contribution efficiency
The Bottom Line
The 2026 budget narrows the gap between salary and trust distribution, but doesn’t eliminate the advantages of good structure. The most important action is to get your FY2026 and FY2027 planning right — these are the last two years of the current system. After that, super becomes even more dominant as the primary profit repatriation tool.
Talk to Fullstack Advisory
We specialise in accounting and advisory for Australian tech founders, SaaS companies, and growth-stage businesses. If you want to work through what these changes mean for your situation, reach out.
