Draft trust legislation still a hammer blow to small builders

Statement from Master Builders Australia

4 September 2026

Despite some policy changes in the draft trust legislation released yesterday for consultation, the no-win situation for many small building businesses remains. The updated proposal will still force a choice between reduced flexibility or a costly restructure. Around one in five small building businesses utilise a trust structure.

Included in the draft is a new option that would allow small business owners to keep their existing discretionary trust structure by electing to lock in fixed distributions to nominated beneficiaries.

While this may avoid restructuring costs and potential stamp duty implications on initial assessment, it would permanently strip away much of the flexibility these structures provide to small builders operating in one of Australia’s most volatile industries, where businesses are constantly responding to market fluctuations, material shortages, labour constraints and rising costs.

This option also prohibits the business from adapting to new circumstances, such as the ability to add a spouse, child, or business partner to the structure at a later date, and locks income and capital percentages, every year, removing the ability to adapt to market conditions and to protect assets.

The complexity of the proposed arrangements also increases the risk of unintended consequences and costly mistakes for small business owners trying to do the right thing.

This proposal adds to a growing list of recent Government decisions increasing red tape, complexity and uncertainty for small building and construction businesses at a time when Australia needs them focused on delivering the homes, renovations and infrastructure the country needs.

Master Builders Australia maintains that the legislation must be amended to grandfather existing business structures, particularly small family businesses that established their arrangements under the rules in place at the time. This would spare almost 90,000 small and family builders across the country.

Our submission to the recent consultation can be found here, with work underway on a comprehensive response to the draft legislation.

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

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