Explain That by Velocity Legal

The proposed 30% minimum tax on discretionary trusts has moved from a Federal Budget announcement to exposure draft legislation, bringing greater detail—and considerably more complexity.In this episode of Explain That, Andrew Henshaw is joined by Velocity Legal director Rajan Verma to examine how the proposed regime would operate, how the trustee-level tax and beneficiary credit would interact with the existing trust taxation rules, and why the changes could materially affect the use of discretionary trusts by families and private businesses.The discussion also explores the proposed Excluded Election Trust regime, or EET. The election may allow an existing discretionary trust to remain outside the minimum tax by nominating beneficiaries and fixing their respective shares of trust income and capital. Rajan explains why that apparent solution may create its own problems, including a loss of flexibility, potentially severe consequences if the nomination is breached, and unresolved questions about trust law and transfer duty.Andrew and Rajan also consider the proposed restructuring rollover, the potential state duty costs of moving assets or businesses out of a trust, the treatment of franking credits and corporate beneficiaries, and the difficult timing decisions facing trustees and advisers before the proposed commencement date.The discussion covers:how discretionary trusts are currently taxed as flow-through vehicles;how the proposed 30% trustee-level minimum tax and non-refundable beneficiary credit would work;the potential effect on lower-taxed beneficiaries and corporate beneficiaries;exclusions for genuine discretionary testamentary trusts and certain classes of income;the operation and limitations of the proposed EET regime;rollover relief, transfer duty and the practical costs of restructuring; andwhy trustees may need to begin planning before the final policy and political position is known.The exposure draft was released on 3 September 2026. Treasury describes the proposed regime as applying from 1 July 2028, with a fixed-distribution election and three years of rollover relief from 1 July 2027.

Do you need to pay GST on a one-off property development?For small-scale property developments, GST can materially affect the sale proceeds. A one-off project can still attract GST, and treating a sale on capital account for income tax purposes does not necessarily resolve the GST position.In Part 2 of this two-part series on tax and property development, Andrew Henshaw is joined again by Tom Warrington, Associate in Velocity Legal’s Tax team, to discuss the GST implications and why they need to be considered before signing a contract.The discussion covers:when a property sale may be a taxable supply;what constitutes an enterprise for GST purposes;why a one-off development can still attract GST;how the GST analysis differs from the revenue versus capital distinction;GST withholding obligations and notifying the purchaser;how the margin scheme may reduce GST payable and the requirement for written agreement;the distinction between existing and new residential premises;why a property’s physical characteristics matter when assessing its residential character;the relevance of rental periods and the five-year rule for new residential premises; andwhen changes in use or an input-taxed sale may require adjustments to previously claimed GST credits.A practical discussion for property owners, small-scale developers, accountants and advisers considering the GST consequences of property development.Part 1 examines the income tax and CGT implications, including the revenue versus capital distinction, the taxpayer’s intention and the importance of supporting evidence.For advice on the tax treatment of property developments, contact Tom Warrington or Velocity Legal’s Tax team.

Is your property development profit taxed as a capital gain or as income?For small-scale property developments, that distinction can materially change the tax outcome. A one-off development is not automatically treated on capital account, and whether the CGT rules apply can depend on the taxpayer’s intention, the nature of the development and the evidence supporting their position.In Part 1 of this two-part series on tax and property development, Andrew Henshaw is joined by Tom Warrington, Associate in Velocity Legal’s Tax team, to discuss the revenue versus capital distinction and why it matters.The discussion covers:when a property sale may be treated as the mere realisation of a capital asset;when a development may instead be treated as a profit-making undertaking or scheme;why a one-off development can still be taxed on revenue account;the importance of the taxpayer’s intention when acquiring the property;the factors that may give a development a commercial character;the role of contemporaneous evidence in supporting a taxpayer’s position;the Morton case and its relevance to the capital versus revenue distinction;what can happen when a taxpayer’s intention changes over time; andwhy documenting a change in intention can become particularly important where a property is sold soon after development.A practical discussion for property owners, small-scale developers, accountants and advisers considering the income tax and CGT consequences of property development.Part 2 turns to the GST implications of small-scale property developments, including taxable supplies, the enterprise test, the margin scheme and new residential premises.For advice on the tax treatment of property developments, contact Tom Warrington or Velocity Legal’s Tax team.

What is a heads of agreement, and is it legally binding?Heads of agreement are commonly used at the beginning of a business sale, acquisition or other commercial transaction to record the key terms before a formal contract is prepared. Although they are often treated as preliminary or non-binding documents, poor drafting can create legal obligations, restrict negotiations and affect a party’s position before due diligence is complete.In this episode of Explain That by Velocity Legal, Lauren Gross, Senior Associate in Velocity Legal’s Commercial team, discusses how heads of agreement work, when they should be used, and the legal and commercial risks businesses should consider before signing one.The discussion covers:what a heads of agreement is;the difference between heads of agreement, term sheets, memoranda of understanding and non-binding indicative offers;when a heads of agreement may be legally binding;which provisions are commonly binding, including confidentiality and exclusivity;the role of due diligence before and after a heads of agreement is signed;the risks of agreeing to a purchase price before due diligence is complete;how exclusivity periods operate in business sale negotiations;termination provisions and what happens if negotiations break down;who should prepare the formal sale agreement;how heads of agreement can help manage transaction timelines and deal fatigue; andthe Victorian Court of Appeal decision in Delaney v Delaney and what it demonstrates about binding preliminary agreements.The episode also considers when a heads of agreement may not be necessary and when proceeding directly to a formal contract may be more efficient.A practical discussion for business owners, accountants, advisers, buyers and sellers involved in business sales, acquisitions, share sales or other commercial transactions.For advice on heads of agreement, business sales, acquisitions or commercial contracts, contact Velocity Legal’s Commercial team.

Most taxpayers assume that once the usual amendment period has passed, an old tax assessment is effectively closed. A fraud or evasion opinion can change that.For many taxpayers, the ATO generally has either two years or four years to amend an income tax assessment. But if the Commissioner forms the opinion that there has been fraud or evasion, those ordinary time limits may fall away, allowing the ATO to revisit much older income years.In this episode of Explain That by Velocity Legal, Andrew Henshaw is joined by Tyson Bateman to discuss what fraud or evasion means in Australian tax law, why these allegations can change the course of an ATO dispute, and what taxpayers should consider when the ATO raises concerns about older assessments.The discussion covers:the ordinary two-year and four-year amendment periods;why fraud or evasion can allow the ATO to amend outside those time limits;the difference between an incorrect tax position, evasion and fraud;why evasion can be difficult to identify in practice;how the ATO forms a fraud or evasion opinion;the Administrative Review Tribunal’s decision in Kirtlan and Commissioner of Taxation;reliance on accountant advice in tax residency disputes;why advisers need to be fully informed before advice is relied on;the importance of records, emails and contemporaneous evidence; andwhy engaging with the ATO before an amended assessment is issued can matter.This episode is useful for taxpayers, business owners, private clients, accountants and advisers dealing with ATO audits, tax residency issues, amendment period disputes or fraud and evasion allegations.For advice on an ATO audit, tax dispute, fraud or evasion allegation, amendment period issue or tax residency dispute, contact Velocity Legal’s Tax team.