New tax proposals targeting family trusts have drawn criticism from Australian building industry groups, who warn the changes could increase costs for tradies and builders.
Industry Groups Oppose Proposed Changes
The Housing Industry Association (HIA) and Cosboa have submitted formal opposition to the draft legislation, arguing the measure will disproportionately affect tradies, builders, and family SMEs. HIA estimates around 60 percent of its members operate through family trusts, structures they say are common and legitimate for small operators rather than exclusive to wealthy investors.
According to HIA, the proposed changes could affect licensing, insurance, financing, and contractual arrangements, forcing builders to consult accountants, lawyers, and insurers at additional cost and time. “The Government may view this as a tax measure, but for thousands of small businesses it creates a ripple effect that extends across every aspect of how they operate,” said HIA director Jocelyn Martin.
Cosboa CEO Skye Cappuccio called for outright rejection, citing risks of higher taxes, costly restructuring, and reduced flexibility. She outlined three options for affected businesses: restructure, pay a minimum 30 percent tax rate, or lock in fixed distributions under an alternative election, which could result in a tax rate of up to 47 percent on trust income if changed later.
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Financial and Operational Impacts
Cosboa estimates restructuring costs for small businesses could range from $15,000 to $50,000, not including state and territory transfer duties. Approximately 350,000 Australian small businesses operate through discretionary trusts, all of which could face additional taxes, restructuring expenses, or changes to existing arrangements. “These are not genuine choices. They are three bad options that will make operating a small family business harder and more expensive,” Cappuccio stated.
The legislation, she argued, targets a business structure rather than addressing tax integrity issues the government seeks to resolve. HIA warned the proposal adds to existing industry pressures such as rising insurance premiums, workplace obligations, regulatory costs, and labour shortages. Additional costs could limit investment in staff, apprentices, and equipment, while restructuring could divert builders from construction and site supervision.
Concerns Over Housing Supply
“We need builders on site building homes, supervising projects, employing apprentices and delivering much-needed housing, not sitting in accountants’ offices trying to work out how they need to restructure their business,” Martin said. HIA urged governments to support builders and increase housing supply.
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