Your bucket company has a deadline.
A corporate beneficiary caps the tax on surplus trust profit at 25% or 30% instead of 47%. It has been orthodox planning for decades. On the announced timetable it stops working for new profit from 1 July 2028 - which gives you two financial years to use it hard, and to decide what replaces it.
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What a bucket company actually is.
Slang for a corporate beneficiary. Your family trust makes more profit in a year than the family needs to live on, and distributing the surplus to individuals means paying up to 47 cents in the dollar on money nobody is going to spend. So the trust distributes it to a company instead, where it is taxed at the company rate.
Without one
Up to 47%
Surplus profit distributed to family members at marginal rates, including the 2% Medicare levy. On $100,000 of surplus, roughly $47,000 goes to tax and $53,000 is left to invest.
With one
25% or 30%
The same surplus distributed to a corporate beneficiary. 25% if it is a base rate entity, 30% if not. On the same $100,000, $75,000 stays invested instead of $53,000.
The honest bit
Deferred
It is not a permanent saving. When the money comes out as a dividend you pay the difference, with a credit for the company's tax. What you gain is that the gap stays working for years, and you choose the year and the person.
What changes in 2028, and what does not.
This is proposed, not law. It was announced in the 2026-27 Budget, consultation is continuing, and the start date, the rate and the treatment of existing entitlements could all move. It is worth planning around and not worth panicking about - and anyone telling you otherwise is selling something.
What is proposed to change
From 1 July 2028, a 30% minimum tax at trustee level on discretionary trust income, with corporate beneficiaries receiving no credit for that tax. Distribute to a bucket company after that date and the same income is taxed at the trustee and then again in the company - arithmetically around 60 cents in the dollar. That is not an accident or a drafting gap. The measure is designed to end the arrangement.
The 60% figure is arithmetic on the announced design, not a published rate.
What does not change
Everything already in there. Profit distributed to the company before the start date is unaffected, keeps its franking credits, and the company remains a perfectly good home for retained capital afterwards. Distributions made in the financial years up to 30 June 2028 are still taxed the way they are today.
So this is not a reason to wind anything up. It is a reason to use it properly while it works and to decide, deliberately, where the next dollar of profit goes.
The six-point review.
What we look at when someone asks us to check a bucket company. Most have at least one of these wrong, and the first one on the list is both the most common and the most expensive to leave.
Who owns the shares?
This is the one that is most often wrong, and it is the expensive one. If the shares sit with you personally, every dollar that eventually comes out is a franked dividend on your own return at your own marginal rate. Held by a separate family trust with a corporate trustee, the money can be directed to whoever in the family has room that year. Fixing it later is a CGT event; fixing it now is paperwork.
Was the cash actually paid across?
A distribution on paper that never moved is an unpaid present entitlement, and the ATO's position is that it can be treated as a Division 7A loan back to the trust. That means a complying loan agreement and minimum repayments every year at the benchmark rate - 8.77% for FY2026-27. Miss one and the shortfall becomes an unfranked deemed dividend.
Is the money doing anything?
A lot of bucket companies are a bank account. Cash sitting at call has been quietly losing to inflation for years, and the whole point of paying tax at the company rate instead of the top rate was to keep more capital working. If it is idle, the saving is theoretical.
Are the Division 7A loans clean?
Not just the trust entitlements - any money that has come back out to shareholders or associates. Loan agreements in place before lodgement day, minimum yearly repayments actually made, interest at the benchmark rate. This is the most common reason an orthodox structure turns into an amended assessment.
Are the franking credits going to be usable?
Tax paid at 25% franks dividends at 25%. If the company drifts into being an investment company it starts paying 30%, and the interaction between the rate it paid and the rate it franks at is where people quietly lose value. Worth modelling before it happens rather than after.
Is it still the right home for new profit?
Until 30 June 2028 on the announced timetable, yes. After that the design changes, and the question stops being how to use it and starts being where new profit should go instead. That is the strategy half of this, and it needs deciding well before the date.
If yours has been running for a few years and nobody has looked at the shareholding or the loan agreements since it was set up, that is the normal state of affairs and not a criticism. It is also exactly why this is worth doing before the deadline rather than in the last quarter, when every accountant in Brisbane is doing the same review at once.
And then, where does profit go instead?
This is the strategy half, and it is the more important one. If your business trades through a trust, the long-term answer is usually to stop - so profit is retained in a company at the company rate at source, rather than being distributed anywhere at all.
Move the business into a company
The small business restructure rollover moves a business from a trust into a company without triggering CGT, and eligible Queensland small businesses may also access a duty exemption on the transfer. The Government has additionally flagged three-year CGT rollover relief from 1 July 2027 aimed squarely at businesses restructuring out of trusts - which is the clearest signal available about which direction it wants people to go.
How a restructure actually worksAlready a company? Interpose a holding company
If you already trade through a company, retained profit can be paid up to a holding company as franked dividends - same tax environment, but quarantined from trading risk, and the holding company becomes the family group's investment vehicle. This is the structure we push hardest, and it does not depend on the 2028 measure passing.
Trade Co, Hold Co, shareholder trustStill trading through a trust and wondering whether that is the problem? Start with the trading trust question.
What the review costs.
A bucket company review is a defined piece of work with an end, so it is priced that way rather than folded into a monthly fee.
Bucket company review
$300 - $600
The six points above, checked against your actual documents, with a written summary of what needs fixing and what it will cost. An initial consultation is $300; written advice afterwards is $300 to $500 on top.
Division 7A loan agreement
$250
A new complying agreement where one is missing. An annual drawdown calculation on an existing loan is $100.
Company and shareholder trust set up together
$3,500
Where the shareholding needs to be built properly from the start - the trading company and the shareholder trust with a corporate trustee, set up as one piece.
Structure review and recommendation
$3,000 - $8,000
The full question, modelled against your real numbers: where profit should go from 2028, what a restructure would cost and save, and the CGT and duty positions on each route.
All ex-GST and indicative. Every other price is published too.
Based on announced measures as at 19 August 2026. The 30% minimum tax on discretionary trust income and the associated CGT rollover relief were announced in the 2026-27 Budget and are not yet law. Consultation is continuing and the final measures may differ.
Frequently asked questions.
What is a bucket company?
A company that exists to receive distributions from a family trust - a corporate beneficiary. Instead of pushing surplus profit out to family members at marginal rates of up to 47%, the trust distributes it to the company, where it is taxed at the company rate: 25% for a base rate entity, 30% otherwise. The name is just plumbing slang - profit that has nowhere better to go pours into the bucket.
How much tax does a bucket company actually save?
On the face of it, the gap between the top marginal rate of 47% including Medicare and the company rate of 25% or 30% - so up to 22 cents in the dollar on the surplus. But it is deferral, not a permanent saving. When the money eventually comes out as a dividend, it is taxed in the recipient's hands with a credit for the tax the company already paid. The real value is that the difference stays invested and working in the meantime, and that you choose the year and the person it comes out to.
What is the catch with a bucket company?
The cash has to actually move. A paper distribution the trust never pays across is an unpaid present entitlement, and the ATO's position is that it can be treated as a loan from the company back to the trust under Division 7A - which means a complying loan agreement and minimum repayments every year at the benchmark rate, 8.77% for FY2026-27. Miss a repayment and the shortfall is a deemed unfranked dividend, taxed at marginal rates with no credit. That is a worse outcome than never having done it.
What is happening to bucket companies in 2028?
This is proposed, not law, and worth watching rather than panicking about. In the 2026-27 Budget the Government announced a 30% minimum tax at trustee level on discretionary trust income from 1 July 2028, and under the announced design a corporate beneficiary receives no credit for that trustee-level tax. Distributing to a bucket company after that date would mean 30% paid at the trustee and then tax again in the company on the same income - arithmetically about 60 cents in the dollar. The measure is explicitly designed to end the arrangement. Consultation is continuing and the start date, rate and treatment of existing entitlements could all change.
Should we wind ours up then?
Almost certainly not, and this is the part people get wrong. The proposed change affects distributing NEW profit to the company from 1 July 2028. Profit already sitting in there is not affected - it stays a perfectly sound home for retained capital, and it keeps its franking credits. What changes is where the next dollar of trust profit should go, which is a structure question, not a wind-up question.
So what should we be doing between now and June 2028?
Two things. Use it properly while it works: make sure the shares are held the right way, the cash is actually moving, the Division 7A loans are complying and the money is invested rather than idle. And decide where profit goes afterwards - which for most trading businesses means moving the business out of the trust into a company, so profit is retained at the company rate at source instead of being distributed at all. The Government has also flagged three-year CGT rollover relief from 1 July 2027 for exactly that restructure.
Can I set one up now, this close to the change?
Yes, and for a profitable trust it can still pay for itself in the first year. You have the financial years to 30 June 2028 on the announced timetable, and a company that receives distributions in that window keeps the benefit of them afterwards. But if you are setting one up now, set it up correctly - particularly the shareholding - because getting that wrong is what makes it expensive to fix later.
Does a bucket company need its own bank account?
If the distributions are actually being paid across, yes - and they should be. A corporate beneficiary with no bank account is usually a sign the entitlements are staying unpaid, which is the Division 7A problem. The ongoing cost of running one properly is modest and it is on our published fees page like everything else.
Is a bucket company aggressive tax planning?
No. A properly run corporate beneficiary with complying Division 7A loans is orthodox and has been for decades. What draws attention is sloppy execution - unpaid entitlements, missed repayments, distributions to family members who never see the money, which is section 100A territory. The structure is not the risk; the administration is.
Do you have a bucket company? It needs a look.
Two financial years is enough time to use it properly and decide what comes next. It is not enough time to leave it to 2028.
Or call 07 3899 8311.