I rise to speak on the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026. I'll start with the minimum tax on discretionary trusts, then turn to the changes to capital gains tax and the R&D tax incentive. Last month I spoke in this parliament about the pressures on small businesses in Curtin. Rent, insurance, wages and super are all rising, and many owners are squeezed between rising costs on one side and customers with less to spend on the other. I understand why many will look at this bill and see one more cost. Many family businesses set up a discretionary trust years ago on their accountant's advice for legitimate reasons like asset protection, succession planning and keeping the business in the family, and they have followed the rules as they found them. But I need to weigh their concerns against what's fair for the whole community and for the generations coming after us.

On balance, I support the broad intent of this bill, and I'll move amendments to improve it. My guiding principle is simple: income should be taxed in a broadly similar way whether it comes from work or from wealth. At the moment, this isn't the case. A nurse or an electrician on an ordinary wage pays 30c in tax on every dollar they earn. They can't split that income with anyone. In contrast, a man earning $200,000 through a family trust could split that income across his family, who could pay an average tax rate of only 12 per cent on that income, less than half of the nurse or the electrician.

There are now more than a million trusts in Australia. That's about 40 trusts for every 1,000 people, 20 times as many per person as in the UK and four times as many per person as in the US. About 840,000 of them are discretionary trusts. Most trust income flows to the top 10 per cent of earning families. This is an intergenerational issue. Our tax system leans heavily on taxing work, and that load falls hardest on younger Australians trying to buy a home and build a life. Every time we put this in the too-hard basket, we pass the problem onto our kids. This bill says that income flowing through a discretionary trust should be taxed at no less than 30 per cent. It doesn't abolish trusts. Where trust income already goes to people paying 30 per cent or more, nothing changes. Where things will change is where trust income goes to family members on lower tax rates. In that case, the trust will pay a top-up, so the income is taxed at 30 per cent.

Small-business owners told me that no-one is looking at how all these changes add up for them. I take this seriously, and, before deciding my position on this bill, I went through the government's impact analysis carefully, looking at the estimated impacts and costs. Around 85 per cent of small businesses don't use a discretionary trust at all, and more than 90 per cent won't be affected in any given year. This bill has also been improved since it was first announced. Existing trusts can elect to fix their beneficiaries and stay outside the minimum tax without restructuring or triggering stamp duty. Businesses that would rather restructure get three years of rollover relief. Where businesses do choose to restructure, they can be hit with state stamp duty, and the federal rollover relief does nothing about that. In WA, duty can apply to a business's goodwill, plant and equipment, not just its property. I'm calling on the Treasurer to work with the states, particularly the WA government, on duty relief for restructures made because of this reform.

Estimates of restructuring costs vary widely, from Treasury's average of about $11,000 to COSBOA's $15,000 to $50,000 before stamp duty. No-one knows how many trusts will restructure, elect or simply pay the tax, and those decisions must be made before rollover relief closes in June 2030. This uncertainty could be addressed through two reviews I'm proposing as amendments in consideration in detail. First, the Small Business and Family Enterprise Ombudsman would report by March 2030 on how small businesses are managing the transition while there's still time to extend the deadlines. Second, an independent review would start by January 2031 to test whether the bill has actually worked, whether it's brought the tax on trust income closer to the tax on income from work and what it has really cost small business. Both of these reports would be tabled in parliament.

I've also circulated a second reading amendment on testamentary trusts, which are trusts set up under a will. The bill includes an exclusion for genuine testamentary trusts, and I support that intent, but concerns have been raised with me about two flaws in how this exclusion is drafted. First, new conditions apply to testamentary trusts established on or after 1 July 2028, but the bill doesn't actually say what 'established' means. Administering an estate can take years, so a will signed decades ago by someone who dies before 2028 could still be caught, and someone who has lost capacity can't update their will at all. Second, the test asks, 'Who can benefit under the will?' For years, wills have included broad beneficiary classes, including companies and other trusts. Under this bill, naming just one of those entities could remove the exclusion for all of the trust's income, even if that entity never receives a cent. My second reading amendment calls on the government to apply the new rules only to wills made or changed after 1 July 2028, so people know where they stand. It also asks that one ineligible beneficiary named in a will not affect the tax treatment of everyone else. That keeps the integrity of the measure while stopping an unused clause in a will from unravelling plans made by families often years earlier.

To the Treasury Laws Amendment (Tax Reform No. 4) Bill 2026, the first schedule in this bill is the innovative business CGT concession. This is a carve-out from the new capital gains tax rules for innovative businesses, particularly startups. I've been calling for a carve-out for startups and early-stage businesses since the day after the budget. Without one, start-ups would pay a huge amount of capital gains tax, and this would put a significant drag on some of the most productive and innovative businesses in the country. I'm pleased that the government has acted on this, but I'm very concerned with the current shape of the proposed carve-out. The innovative business CGT concession is narrow, complex and ambiguous. It creates a company age limit of 15 years, which is too short for many of our most innovative companies, particularly in biotech and medtech. This is why I seconded the member for Wentworth's second reading amendment. It also only applies to companies listed on the stock exchange. While the intention is to isolate the concessions strictly for risky assets, there are industries for which listed markets provide an important source of early stage capital, particularly biotech and mineral exploration. This is better than nothing, but it's not really good enough. Productivity growth is essential to rising living standards, and, while I support the government's broad approach to tax reform—lowering taxes on work paid for by higher taxes on asset investments—this cannot have a disproportionately negative impact on our most productive, innovative businesses and sectors. Otherwise, this will come at the cost of Australia's future prosperity.

I want to focus in particular on the schedule 2 changes to the research and development tax incentive. I support better targeting of the incentive, and I acknowledge the government has listened to the sector by raising the company age limit it first proposed for therapeutic goods R&D from 10 to 15 years. For companies that aren't yet making a profit, the incentive comes as a cash refund, and that money goes straight back into research and helps bridge the gap between capital raisings. But a 15-year age limit on that cash refund will hit the companies doing the long, expensive work of bringing new medicines and medical technologies to patients the hardest. Medical innovation runs on long timelines. The government's own Department of Health, Disability and Ageing puts the average time to develop a new medicine at 17 years. Products must go through preclinical work and several phases of clinical trials, manufacturing and regulatory approval before they even earn a dollar. The cut-off will often fall in the middle of late-stage clinical trials, the most expensive stage of all. These are not slow or lazy companies. AusBiotech tells me that 30 per cent of its member companies doing R&D are 15 years or older. In one sample of 27 companies, 11 were older than 15 years, and 10 of those were in or preparing for clinical trials.

This matches what I'm hearing directly in my electorate of Curtin. Argenica Therapeutics grew out of research at the University of WA and the Perron Institute and is developing a treatment for stroke. It's already run a trial with 92 stroke patients across 10 Australian hospitals, and it's planning a 400-patient trial across Australia and the United States. Argenica was founded in 2019. If everything goes exactly to plan, it expects its first revenue in 2034, right at the 15-year mark. One setback in a trial and it would lose the cash refund just as it reaches the finish line. The same drug is also being developed for traumatic brain injury, which isn't expected to earn revenue until 2037. This exposes another flaw in the company based age limit. It assumes innovation stops after the first product. Argenica is also a listed company, meaning its investors will not be eligible for the CGT discount under the innovative business CGT concession. The combined effect of these two measures is a double hit on the same company at the same moment. Just as Argenica would lose its R&D cash refund, it would also lose the investor incentive that might have helped replace that money.

WA is home to more than 40 biotech and pharmaceutical companies and more than 50 medical technology and digital health companies. The WA government has invested heavily in clinical trial infrastructure in our hospitals. Clinical trials do more than create jobs. For Australians with cancer or a disease with no effective treatment currently available, a trial is often how they get early access to new therapies, and industry funds $1.3 billion of the $1.6 billion spent on clinical trials in Australia. If support ends partway through development, the trials and the manufacturing and jobs that come with them will go where the support is available. AusBiotech tells me one Australian medical technology company has already begun hiring 60 R&D staff in Singapore instead of Australia.

The government's own review of the R&D system, Ambitious Australia, found the R&D tax incentive must be globally competitive, it must keep R&D intensive firms here and it must extend support to commercialisation. It didn't recommend an age limit. In fact, Robyn Denholm, who chaired that review, said today that time limits should be removed altogether because long-term R&D is critical to progress in many industries, not just medical technology. That's why I'm proposing a second reading amendment to the Treasury Laws Amendment (Tax Reform No. 4) Bill calling on the government to remove the age limit on the R&D tax incentive for companies developing new medicines and medical technologies. Many of these products take more than 15 years to reach market and, without that change, we risk pushing medical research, clinical trials and the jobs that come with them offshore.

These bills move us towards a fairer tax system, but fairness should not come at the cost of families, estate plans or the research and innovation on which our future prosperity depends. I commend the bills to the House, but I move:

That all words after "notes that" be omitted with a view to substituting the following words:

(b) the bill applies a beneficiary test to testamentary trusts 'established' on or after 1 July 2028, but does not say whether a testamentary trust is established when the will is made, when the will-maker dies, or when estate assets pass to the trustee;

(c) as a result, Australians making or reviewing a will cannot know whether the trust it creates will be covered by the new rules; and

(2) calls on the Government to amend the bill so that:

(b) the beneficiary test applies only where a testamentary trust is established under will or codicil provisions made or varied on or after 1 July 2028, under a court order made on or after that date, or on an intestacy where the deceased died on or after that date; and

(c) the exclusion applies to income derived for the benefit of an individual, an exempt entity or the trustee of a special disability trust, so that naming an ineligible beneficiary in a will does not affect the treatment of the trust's other income".