Trusts Tax will hit small business and home buyers

3 November 2026

The Federal Government is about to hit over 90,000 construction businesses with higher taxes and costs with their trust crusade and needs to adopt practical compromises outlined in Master Builders’ submission to the parliamentary committee examining the legislation.

Master Builders Australia CEO Denita Wawn said the majority of these are small businesses, with impacts also to housing supply, affordability and home buyers.

“The bottom line is that these reforms will increase the cost of building and construction work. Whether through restructuring expenses, additional compliance and administrative costs, or reduced business returns, builders will have little choice but to pass these costs on to clients and homeowners,” said Ms Wawn.

“Equally, there are risks to clients and homeowners whose recourse to secure rectification work via state-based consumer protection arrangements could be undermined by business restructures forced by a Federal Government decision.”

Master Builders Australia has made no secret of its opposition to the changes and believes the reforms should be abandoned. However, it has also put forward practical compromise options like grandfathering existing arrangements or introducing a small business carve-out.

“These reforms won’t build a single additional home. At a time when Australia is already facing a 262,000 National Housing Accord shortfall, the Government is proposing to burden tradies with more cost, complexity and uncertainty. Builders urge the Government to come to the table and protect the small businesses that get up every day and build this country,” said Ms Wawn.

The costs involved are far from insignificant. For a small family-owned construction business with taxable income of $400,000, the reforms could result in tax increases of up to 70 per cent, annual ongoing compliance costs of between approximately $21,000 and $67,500, and one-off restructuring costs ranging from $82,000 to $175,000.

“It is unrealistic to expect small businesses to absorb costs of this magnitude without significant consequences. Independent modelling shows the Budget’s other measures will lead to less homes, higher rents and a reduction in constructions jobs, this will make it even worse,” said Ms Wawn.

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

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