Following on from our previous article discussing the Pharmacy Business Ownership Act 2024 (Qld) (the Act) and pharmacy ownership using a company structure, this article focuses on what pharmacy owners must consider if their business operates under a trust or trustee company structure.
With the Act expected to commence in late 2025, pharmacy owners should urgently review their structures to ensure compliance.
Trust Structures in Pharmacy Ownership
Trusts are commonly used for asset protection and tax planning. Under a trust structure, a trustee (often a company) holds assets on behalf of beneficiaries in accordance with the terms of a trust deed.
Where trust income is not fully distributed, it is taxed at the highest marginal rate (currently 45%, excluding the 2% Medicare levy). To reduce tax, many pharmacy owners adopted bucket company structures, which direct undistributed income to a corporate beneficiary to be taxed at the lower flat corporate rate (currently 25% for base rate entities, otherwise 30%).
However, under the Act, these structures will no longer comply with pharmacy ownership requirements.
What Has Changed?
As outlined in our previous article, the Act is intended to ensure that pharmacy ownership and control in Queensland is restricted to practising pharmacists and their close adult relatives (defined as a spouse or adult child aged 18 or over). It introduces two key tests:
- The Eligible Person Test: Only practising pharmacists, corporations made up of all practising pharmacists, corporations made up of practising pharmacists and their close adult relatives, or eligible friendly societies may own a pharmacy business.
- The Material Interest Test: Only practising pharmacists and their close adult relatives may hold a material interest in a pharmacy business.
A material interest includes:
- An interest in the business as a shareholder of an entity that owns the pharmacy;
- An interest as a beneficiary of a trust where the trustee owns the business; and
- Any entitlement to receive consideration that varies according to the profits or takings of the business.
As a result, all trust beneficiaries must be practising pharmacists or close adult relatives. Bucket companies, corporate beneficiaries or other relatives cannot lawfully hold an interest as a beneficiary.
This position was clarified in Queensland Health's Consultation Paper on the Health Legislation Amendment Bill (No. 2) 2025, released in March 2025. The paper noted that the Act, as originally drafted, may allow a shareholder to hold shares on trust for a person who is not a pharmacist or close adult relative, because their interest would not be captured as a material interest (as the trustee of the trust is a shareholder, not an owner).
To remove this ambiguity, the proposed amendments will clarify that a shareholder cannot hold shares on trust for another person unless that person is a practising pharmacist or close adult relative. Where such a trust relationship exists, the beneficiary will be deemed to hold a material interest under the Act.
We are also aware that some advisors have interpreted the Act to allow for a beneficiary of a trust that has an interest in a pharmacy to hold their interest as trustee of another trust.
Tax Risks of Trust Restructuring
Restructuring or amending a trust to comply with the Act is not without risk. Significant amendments to a trust deed may trigger a trust resettlement, which can result in:
- Capital Gains Tax (CGT);
- Loss of accumulated losses or gains from the original trust; and/or
- Transfer duty on trust assets, unless an exemption applies.
Pharmacy owners should obtain legal and accounting advice early to manage these risks and avoid unintended tax consequences.
Duty Relief
To ease the compliance burden, the Queensland Government has introduced an administrative duty exemption for eligible pharmacy businesses restructuring to comply with the Act.
Eligible transactions or acquisitions may be exempt from transfer duty, landholder duty, or corporate trustee duty if they occur within the relevant period and meet the conditions set out by the Commissioner of State Revenue. The relevant period began on 1 January 2025 and ends at the same time as the transitional periods (discussed below).
Pharmacy owners should obtain professional advice to confirm eligibility for this important concession.
Transitional Relief
Most existing pharmacy businesses will have one year from commencement to apply for a pharmacy business licence. A limited number of existing businesses that meet the eligibility criteria in sections 214 to 217 of the Act will have two years to apply.
After the relevant transitional period ends, non-compliant structures will breach the Act and may attract penalties of up to 200 penalty units (currently $32,260) along with a potential loss of the right to own the pharmacy.
If your ownership structure includes a corporation with corporate shareholders, or a trust where one of the beneficiaries is not a registered pharmacist or close adult relative, you must carefully consider the transitional provisions and seek legal advice.
Next Steps for Pharmacy Owners
Pharmacy owners using trust or trustee company structures must:
- Review their ownership structure and trust deed;
- Identify all shareholders and beneficiaries to confirm eligibility under the Act;
- Amend their trust deed to comply with the Act;
- Carefully consider the implications of restructuring for future income distributions, tax planning, and retained profits;
- Seek legal and accounting advice early to implement changes and avoid unintended tax consequences; and
- Finalise any necessary changes before the end of the transitional period.
How Bennett & Philp Can Help
Our pharmacy law team has extensive experience assisting pharmacy owners to:
- Review and restructure ownership and trust deeds;
- Navigate CGT, transfer duty, and trust resettlement risks;
- Work with accountants and advisers to develop compliant, tax-efficient structures; and
- Asist with pharmacy business licence applications.
If your pharmacy operates under a trust or trustee company structure, now is the time to act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
