Government’s trust tax throws builders and consumers under the bus

7 August 2026

The Federal Government’s proposed changes to trusts, including tax increases, will saddle small building businesses with tens of thousands of dollars in additional costs, increase the cost of construction and risk undermining consumer protections, according to new findings by Master Builders Australia.

Many builders will be forced to choose between paying significantly more tax or undertaking a costly and complex restructure to establish a completely new entity, with potential implications for consumer protections such as statutory warranties.

These concerns are among a range of unintended consequences and unanswered questions highlighted in a submission by Master Builders Australia to the Federal Government.

The impacts on small business builders will be substantial. The analysis indicates that a small family-owned construction business with taxable income of $400,000 could face tax increases of up to 70 per cent, and one-off restructuring costs of between $82,000 and $175,000. It could also include ongoing annual costs of between $21,000 and $67,500.

These are not multinational corporations. They’re local builders building homes, roads and facilities, employing apprentices and supporting communities across Australia.

Master Builders Australia CEO Denita Wawn said the reforms come at the worst possible time, during a housing crisis when the Federal Government should not be making it harder or more expensive to run a building business.

“As our submission outlines, changing a building business from one structure to another isn’t like changing your mobile phone plan. It can involve lawyers, accountants, banks, insurers, licences and contracts, all of which cost money and ultimately make building more expensive at the worst possible time.

“We have identified a range of unintended consequences that have not been properly considered and provided them to the Treasurer. These include flow on consequences that may undermine state and territory regulatory arrangements and the fact that the proposed tax rollover relief fails to account for the practical realities of changing long-standing business structures.

“At a time when governments are looking for ways to increase housing supply, improve affordability and support productivity, these changes risk achieving the exact opposite,” Ms Wawn said.

Master Builders Australia’s recommendations include at a minimum grandfathering arrangements, so the changes apply only to new structures rather than businesses that have been operating under existing rules for many years. In addition, a permanent small business carve-out, a formal regulatory impact assessment and a narrower definition of discretionary trusts should be considered.

Media contact: Dylan Hafey, Adviser, Media & Government Relations

0497 330 064 | dylan.hafey@masterbuilders.com.au