The tax changes in May’s federal Budget have triggered a familiar reflex among wealthy families and their advisers: how do we reduce some of the pain?
There is a fair bit to weigh up. Division 296 is now law, taxing super balances above $3 million from 1 July 2026. The CGT and negative gearing changes passed in June and are law too, in force from 1 July 2027. The trust reform is still moving, and families aren't necessarily waiting to see how it settles before they act.
When structural change lands at once, the instinct is to restructure – reallocate toward income, rework the trust, shift ownership, and trim exposure to whatever triggers the biggest tax event.
I understand the urge to act quickly, but I'm not convinced an automatic response holds up.
We spend a lot of time with families who ask a hard question of their portfolio: "am I invested correctly?" I fear, however, they should be asking a harder version: "am I building something that can outlast me?"
For most families restructuring right now, the honest answer is no. A smaller tax bill this year says nothing about whether the portfolio can still do its job in 2046. Before restructuring because of the Budget, sit with these five questions first.
Does the new allocation still earn what's needed?
Gregory Clark, the University of California, Davis economist behind The Son Also Rises, tracked English families across more than 400 years and found that wealth and status hold on far longer than most people expect. What rarely holds on is the money itself. Fortunes get divided, spent and diluted, and by the time you reach the great-grandchildren the size of the original inheritance barely shows up in the outcome.
Once you allow for a growing family, spending, tax and fees, keeping real wealth intact across generations takes something close to a 9% real return, year after year. That's demanding in any environment, and treasurer Chalmers’ Budget makes it even harder. Every dollar lost to CGT timing, and every structure that trades growth for a cleaner tax outcome, pushes the hurdle further away.
A restructure that shaves this year’s tax bill but caps the compounding ability of your portfolio is not necessarily a win, in fact it is more likely a short fix way of losing. Before signing off on any change, the family should understand the real return the new structure needs to produce, not just the tax it saves.
What are you giving up to save the tax?
Tax efficiency and portfolio resilience are not the same thing, but the Budget makes it easy to mistake one for the other.
Trusts are the clearest example. In theory, families using them for genuine succession and asset protection should carry on. In practice, once you strip out the income-splitting benefit and add on a flat 30% minimum tax, a lot of the appeal goes, and we expect many families to move toward company structures as the primary holding vehicle.
The detail here is still being written. The trust measure isn't law yet, a second bill is due later this year with the carve-outs, and existing testamentary trusts are already set to be spared. Restructure around a headline now and you risk locking in a structure built for a rule that no longer applies by the time the final detail is legislated.
Bucket companies as a strategy lose most of their appeal too. A corporate beneficiary gets no credit for tax the trust has already paid, creating double taxation of the same income.
None of that is wrong to act on. It is a trade, and the family should be able to say plainly what they're giving up for the perceived benefit.
Is the family taking on more risk than they realise?
Some alternatives on offer look better on paper than in practice.
The new-build property exemption preserves both negative gearing and the 50% discount, arguably the most tax-friendly residential exposure outside super. But a tax break doesn't fix build quality, completion risk, or oversupply in the wrong postcode.
Super has come through the Budget remarkably intact and remains the most lightly taxed structure available. But Division 296 is now a real constraint at the top, and contribution caps and preservation rules mean it can only do so much of the work.
Reallocating growth assets into index-tracking exposure is another common move. It feels simple, liquid, and diversified almost by definition. Though, that assumption deserves scrutiny: passive exposure marketed as diversification is often a concentrated bet in disguise. The ASX 300's top ten now make up around 46% of the index, and the S&P 500's at close to 38%. Concentration risk is real.
If chasing tax efficiency pushes a family further into any of these lanes than they'd otherwise choose, that is a cost, not a long-term strategy.
Is any restructure planned as one whole, or piecemeal?
All families make mistakes. But taking a single decision without looking at the whole picture is one of the best mistakes to avoid.
Take a family holding an asset with a large unrealised gain as the CGT rules change from 1 July 2027. One might realise it beforehand and redeploy. Another might hold and manage around it. Either can be right, but only once CGT timing, Division 296 exposure, drawdown needs and the shape of the wider portfolio are weighed together rather than solved as separate problems. The mistake is rarely which option you pick. It is picking one before you have seen how it moves everything else.
Is it sometimes safer to just absorb the tax?
The conversations we've had since Budget night tell us families are genuinely alarmed, not by any single measure, but by the combined picture. Trusts, CGT, negative gearing, and Division 296 are all moving in the same direction, all between now and 2028.
I don't think the wealthy will panic-sell, but capital that sits, waits, or quietly goes offshore is a real prospect, and so is a portfolio pushed to earn back every dollar of tax saved through a restructure.
A bigger cheque to the ATO is not the scoreboard. Sometimes the pragmatic, less elegant choice, paying tax that a more aggressive restructure might have avoided, is the one that lets families stay invested for the long term, and able to sleep at night.
None of this is an argument against asset restructuring. Some restructures are the right call, regardless of the Federal Budget impact. Maybe the trust needed fixing anyway, or the super settings were never suited to the family in the first place.
The test is whether the decision stands on those grounds, and not because a headline tax saving made one line item of the spreadsheet look better.
Across four centuries of data studied by the industrious Clark, the money itself was never what carried a family from one generation to the next. It was judgement, discipline, and the willingness to keep going when the easy answer was to cash out.
Families that lost everything through war or policy shock often rebuilt within a generation or two, not because they recovered the original capital, but because they'd kept the capability to generate it.
A tax-efficient structure teaches the next generation none of that. It just moves numbers between boxes, while the underlying portfolio quietly becomes less effective at the one job that matters most.
So restructure when the restructure earns its place, not simply because Jim Chalmers gave you a reason to. A smaller tax bill and a portfolio that compounds for decades are not the same thing, and the 2026 Budget is about to make that distinction expensive to get wrong.
Joshua Derrington is the Chief Investment Officer, Alvia Asset Partners, an independent family office investment manager.