Treasury Submission September 2026

1. Introduction and Outline

1.1. This submission is made by Savrow Private and authored by Michael Dundas, Co Founder and Director. It supplements our submission of 31 July 2026 (the First Submission). Michael's experience includes 20 years as a Partner of Pitcher Partners Sydney and predecessor firms, including 13 years as the partner in charge of the Private Business and Family Advisory Division, and 3 years as the chairperson of the Pitcher Partners National Private Business and Family Advisory Committee. His career and expertise include a specialist focus on taxation, business advisory and private group structures.

1.2. For ease of reference, this submission will refer to:

1.2.1. the exposure draft package announced on 3 September 2026 as the Proposal;

1.2.2. the proposed excluded election trust arrangements as the Election Regime; and

1.2.3. the Policy Intent retains its meaning from the First Submission: being the 30 per cent minimum tax objective and the stated concern about income splitting.

1.3. We welcome the changes made since the first round of submissions concerning charitable and other exempt beneficiaries and refunds of relevant excess franking credits. They respond to important concerns.

1.4. They do not resolve our principal concern and principal objection: the double taxation of corporate beneficiaries. This measure has not been satisfactorily explained, is expected to be the leading cause of unnecessarily punitive and costly business restructures and is not resolved by the proposed Election Regime.

2. Core Positions

2.1. Central to our submission are the following core positions:

2.2. Core Position 1: Double taxation of corporate beneficiaries remains an unnecessary and destructive penalty. Treasury must remove it or explain why it is justified, directly addressing the alternative approaches to the Policy Intent already submitted by Savrow and multiple leading peer companies and advocacy bodies.

2.3. Core Position 2: The proposed restructuring relief continues to fall materially short of providing the tools necessary for businesses in particular, to restructure from punitive and penalty outcomes. Specifically, the Election Regime is not adequate due to the serious and unresolved risks arising from continuing trustee fiduciary obligations, and the high penalties attached to any changes in the election.

2.4. Core Position 3: Removing corporate double taxation would materially reduce the pressure to restructure and the risk of unnecessary and damaging restructure costs, noting also the significant range of straightforward alternative models presented to Treasury to achieve the policy intent.

3. Corporate Double Taxation: Remove It or Justify It?

3.1. The double taxation of a corporate beneficiary is an intended outcome in the Proposal.

3.2. We reject the proposition that describing this outcome as the "simplest mechanism" to protect the integrity of the flow through of minimum tax, justifies its use.

3.3. Intentionally taxing the same economic income twice is a material step outside the principles on which fair and economic taxation has been built. Furthermore, with the high number of alternative proposals from industry to satisfactorily attend to the concerns of misuse of companies, we object to this measure in the strongest possible terms not only because of its departure from the principles of fair and economic taxation, but because of the materiality of the damage it poses through punitive forced restructures.

3.4. We have independently researched and reviewed submissions from professional bodies and specialist advisers. We noted a profound alignment in these submissions when it came to the objection to the double taxation outcome, as well as the submission of highly credible alternative approaches, along with our own recommendations in our First Submission.

3.5. Yet there has been no response from Government or Treasury on these positions. Potentially a very high level of alignment from professional and industry bodies, yet no response on the matter. This is of material concern to us and the basis for our Core Position 1. We do not support this measure without Treasury or Government responding to feedback you have received and putting forward a reasonable explanation for it.

3.6. For affected businesses, the consequences remain as per our First Submission:

3.6.1. either retain an established commercial structure and face materially higher tax on business earnings; or

3.6.2. restructure to avoid that outcome and incur prohibitive state duties, financing, legal, contractual and operational costs.

3.7. We regard that choice as an unacceptable consequence of a provision that is not necessary to achieve the Policy Intent. Businesses should not bear those costs when Treasury is in possession of credible alternative proposals, not at least without justification for not proceeding against industry concerns and recommendations.

3.8. Our First Submission proposed implementation of a net Exempt Trustee Income regime, with separately identified subsequent dividends carrying the corresponding trustee offset outside the ordinary imputation system. We maintain that recommendation and its mechanics are already set out at paragraphs 4.5 to 4.7 of our First Submission. We would equally support some of the alternative proposals you are in possession of.

4. The Election Regime: A Regime Unlikely to Be Used

4.1. In putting forward the Proposal, the Government's announcement recognised restructuring costs as being of high concern and presented the Election Regime as a means of limiting them.

4.2. We do not see Election Regime being effective in limiting the concerning outcomes and our Core Position 1.

4.3. We accept the publicised observation that many businesses and families follow relatively consistent patterns of distribution. However relatively consistent patterns of distribution are distinct from fixed permanent positions. Particularly where the Election Regime extends not only to annual resolutions on income and capital gains, but also to the underlying corpus of the Trust.

4.4. Trustees carry an enduring fiduciary obligation to manage the affairs of the trust estate for the beneficiaries of that trust estate. This is a real and serious obligation that has been the subject of many legal claims from beneficiaries where they feel the Trustee has not exercised their fiduciary obligations appropriately.

4.5. Our concern is, a nomination made today to fix distributions will constitute a legal risk to the Trustee. Even where that Trustee is able to demonstrate that they gave due consideration to the beneficiaries in entering into an election, future changes to either beneficiary circumstances or a future addition of new beneficiaries to the class of beneficiaries, carries a fiduciary duty on the Trustee.

4.6. One may argue that the Election Regime does not bind the Trustee, therein allowing it unfettered capacity to continue to exercise its fiduciary duty over time. However, if at any point in time a Trustee was to make a resolution to exercise their powers under their fiduciary duty, but in a manner inconsistent with the election, the Election Regime then imposes a high cost to this scenario. Penalty taxation in the hands of the Trustee in the year of the change, and future serious taxation ramifications associated with no longer being able to make use of the Election Regime.

4.7. Importantly, the sorts of scenarios that could give rise to this problem are unrelated to any taxation strategy or mischief. Perhaps a beneficiary incurs a disability, goes bankrupt, has children. Just to name a few, these scenarios could challenge the Trustee's fiduciary duty without any correlation to the taxation outcomes of any distribution decision.

4.8. This in turn, as advisors, leaves us equally concerned with our ability to responsibly recommend Trustees contemplate the Election Regime.

4.9. The scenario caused by the aforementioned corporate beneficiary unjustified double taxation, compels one to seriously contemplate this regime to mitigate materially short term punitive costs. However, it comes with a serious concern of the potential for the election to be only a short term remedy that would ultimately need to be unwound, therein only deferring the resolution to problems being fundamentally caused by the unjustified double taxation of companies.

4.10. The obvious solution to this is per our Core Position 1. Abolish corporate beneficiary penalty taxation and adopt one of the many associated recommendations put to you in the first round of submissions. This would materially reduce the number of scenarios within which a business would find itself in a forced or punitive restructure environment.

4.11. Otherwise, to allow the Election Regime to be of use, serious consideration needs to be given to allow much wider or broader scenarios within which an election can be modified, varied or revoked without such high cost of doing so.

4.12. Savrow would be please to give more thought to how this could occur, however the very limited consultation period has prevented us from doing so.

5. Consultation & Engagement

5.1. The period between the 3 September announcement and the 18 September deadline is inappropriate for matters of this seriousness and impact.

5.2. From our independent research of other submissions made in the initial consultation, we are aware of leading advocacy bodies and peer organisations expressing concern with the lack of engagement with industry, and the short consultation period provided for the first round of submissions.

5.3. And the consultation period for the Proposal is shorter again.

5.4. Furthermore, the initial submissions of peer organisations and advocacy groups have not been made available to the public by Treasury, materially limiting accountability and transparency from the consultation process.

5.5. Significant decisions of this nature depend on consultation, transparency and engagement. The cost to organisations such as Savrow to set aside time to make these submissions is material. To engage in this process comes at a cost to our business, and we do this in our hope to support decision making that is in the best interests of the success or the Proposal, and therein, the country.

5.6. The combination of a compressed consultation period, no substantive public answer to the objections put to you, and no genuine discussion of recommendations put to you, leaves us seriously concerned. The economic and corporate penalty of the Proposal has the potential to be material, yet the measures are being advanced as a settled position without genuine reconsideration.

5.7. We recommend a further targeted round of consultation on the matters raised in this submission prior to any legislation being progressed.

6. Recommendations

6.1. As we stated in our First Submission: A tax regime should not first create an unnecessary structural penalty and then rely upon transitional relief to encourage taxpayers to rearrange otherwise legitimate commercial affairs.

6.2. The Government has also expressly stated that the reform "won't change or limit the use of trusts for legitimate reasons".

6.3. Yet the combination of the double taxation of companies, and the proposed Election Regime remedy requiring fixing of entitlements, sits materially contrary and inconsistent to these positions, with the potential for destructive impact on businesses and family groups.

6.4. On this basis our recommendations are:

6.5. Recommendation 1 (consistent with Recommendation 2 in our First Submission): Remove the double taxation of corporate beneficiaries and address the identified integrity risk through any one of the targeted mechanisms, including our Exempt Trustee Income approach, already presented to you.

6.6. Recommendation 2: If Treasury retains double taxation, publish a substantive explanation of why it is necessary, and why the alternatives submitted are inadequate.

6.7. Recommendation 3: If the Election Regime is retained, materially reduce the tax and future election consequences of revocation, particularly where a change is required for a genuine non tax family or commercial reason.

6.8. Recommendation 4: Slow the process down to get it right. Open another targeted round of consultation on these matters to honour the materiality of the matters at hand with genuine and transparent industry engagement.