The draft trust rules come with a reassuring message: if you don't want to restructure, you can make an election instead, with no restructure and no stamp duty. That's accurate, but it's a small part of the decision for anyone whose practice sits in a family trust.
If you're new to the changes, start with The 30% Minimum Tax on Family Trusts: What Doctors Need to Know.
The election requires the trustee to nominate, permanently, who receives the trust's income and in what percentages. Many owners will be tempted to nominate a company for part of the income, so profits can be retained at the company tax rate. On income alone, that can look sensible.
But the same percentages apply to capital. Nominate a company for 40% of the income, and you have also committed 40% of the eventual sale proceeds of your practice to that company.
When a practice is sold, much of its value is usually goodwill, and the small business capital gains tax concessions can be worth a great deal. How those concessions reach you depends on the structure.
Separately, from 1 July 2027 the 50% capital gains discount for individuals, trusts and partnerships is replaced by indexation of the cost base and a 30% minimum tax on gains, for gains accruing after that date. Any modelling of a future sale needs to reflect the new rules, not the old ones.
Moving the practice into a company under the roll-over defers income tax and capital gains tax, but it does not cover state stamp duty, which may be payable in cash at the time. A company also accesses the sale concessions differently from a trust.
The right starting point isn't "which option avoids stamp duty?" It is: when this practice is eventually sold, who will the money need to reach, and when?
For some owners, a company is entirely sensible. For others, particularly where the practice was built from nothing and its value is almost all goodwill, the structure that saves tax on income each year can cost far more than it saves when the practice is sold.
There's time. The election can only be made in the 2028–29 year and the roll-over runs to 30 June 2030. But both choices are effectively permanent, the rules are still in draft, and the cost of the wrong one only shows up when you sell.
Before choosing between the election and the roll-over, it's worth modelling what each does to the eventual sale of your practice. Book a call, or see how we approach practice ownership decisions.
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