TITLE: Australia Trust Tax Hearings: Builders, Bookkeepers and Family Businesses Raise Alarms
Australia’s second Senate hearing on proposed trust tax changes brought fresh warnings from builders, bookkeepers and family businesses. Their concerns go beyond the proposed 30% minimum tax: witnesses say it could affect trading profits, restructuring costs and investment decisions.
The bills have passed the House but are not yet law. The Senate Economics Legislation Committee is due to report on 13 November, ahead of a Senate vote targeted for the third week of November.
Protect established builders from sudden restructuring costs
Master Builders Australia told the committee that the proposed changes could be among the most significant changes to Australia’s tax arrangements since the GST. But, it argued, the GST came with education, transitional support and time to prepare. These reforms, by contrast, could require businesses to change long-standing structures rapidly.
The group estimated that for a small family-owned construction business with $400,000 in taxable income, the changes could increase tax by up to 70%. It put annual ongoing compliance costs at around $21,000–$67,500 and one-off restructuring costs at $82,000–$175,000.
Those costs could flow through to clients and homeowners. Master Builders also warned that forced restructuring might affect homeowners’ recourse under state consumer protection arrangements. It said more than 90,000 builders (around one in five, mostly small businesses) use trusts, and asked senators to abandon the reforms or consider grandfathering existing arrangements or a small-business carve-out.
The Housing Industry Association raised a related warning. Its national member survey indicates about three in five construction businesses use a trust. Managing director Jocelyn Martin said the proposed tax could put the national target of 1.2 million new homes by mid-2029 further out of reach, telling the committee: "Our industry is exhausted. Just once, we'd like to be sitting here considering a bill that proposed to increase housing supply, improve productivity, and encourage investment." The HIA called for existing businesses to be grandfathered, arguing that even seeking advice, before compliance costs are considered, could cost thousands. In her words, this is the "wrong change at the wrong time".
Keep trading family businesses workable
The Family Business Association’s case focused on how the bill may affect operating businesses that retain profits to grow. A food processor, fabricator, transport operator or independent grocer may leave earnings in the business to buy equipment or open another site. The Association argued that this is different from splitting passive income, which is the stated policy target.
Its four requests are to tax passive income rather than trading profits, prevent reinvested profit from being taxed twice, provide a practical pathway for trading businesses, and assess the cumulative effect of new obligations. The proposed alternatives, locking distribution arrangements in for life or moving out of a trust, may not suit businesses whose profits vary or whose restructuring could trigger stamp duty.
Chief executive Catherine Sayer has also pressed the committee to publish the economic modelling, saying the Senate is being asked to vote on a $4.5 billion tax on figures nobody outside Treasury has seen. She argues "the 30 per cent is a floor, not a rate": the excluded election trust locks a family's distribution split for life, trusts formed after 1 July 2028 cannot elect at all, and the restructure path relies on stamp duty relief the states have not committed to give.
The Association says uncertainty is already affecting investment: new trust formations have fallen by 50–70% since the Budget, and some members have paused succession plans. Its 2026 Family Business Barometer found only 27% of respondents had a succession plan. Family businesses account for around 70% of Australian companies and employ about half the national workforce.
Check for double taxation and growing compliance costs
COSBOA said the changes could penalise businesses using trusts for asset protection, succession planning and continuity. It called for grandfathering for small businesses with annual turnover below $10 million. The Institute of Certified Bookkeepers urged the government to use existing anti-avoidance provisions instead. Its executive director, Matthew Addison, called the proposed tax a “blunt instrument” with significant potential downsides for small businesses.
At the hearing, the Institute of Public Accountants’ Tony Greco also questioned the need to tax profits reinvested through corporate beneficiaries, saying: “We don’t see the mischief, and it goes beyond that policy intent. We don’t sign up for double taxation.”
CA ANZ described a possible double-tax outcome involving an interposed fixed trust: a discretionary trust distributes $100, tax is paid at 30%, and the fixed trust then distributes the amount to an individual on the top marginal rate. CA ANZ said the fixed trust may have no income left against which to use the offset described in the explanatory memorandum, potentially producing an effective rate of 75–77%. It proposed a “t account” for companies to prevent double taxation without requiring costly restructuring.
CPA Australia's Jenny Wong told senators its estimate of ongoing compliance costs was $221 million–$595 million a year, in addition to $2 billion–$2.8 billion in advice costs. She said the combined impact of other regulatory changes could push ongoing compliance above $1.1 billion annually, warning: "Australia cannot keep talking about productivity while adding hundreds of millions of dollars a year in compliance costs."
Allow time to understand the rules
Representatives from CA ANZ, the IPA and CPA Australia supported delaying implementation when a senator asked whether a one-year extension would help. They said one year might not be enough. Legislation is only the first step: the ATO must issue guidance, accountants need to interpret it, and businesses must decide how to respond. State stamp duty, other reforms and limited professional capacity could add to the pressure.
This was a question raised by a senator; the government has not proposed a delay. The current timetable envisages a roll-over window opening on 1 July 2027, with the proposed tax applying to income years beginning on or after 1 July 2028.
While Parliament considers the bills, you can prepare without making irreversible decisions:
- Map your trust structure and beneficiaries so you can identify what may be affected.
- Keep bookkeeping and distribution records current to make any later review more efficient.
- Track the committee report and final legislation before changing your reporting or structure.
- Record questions about reinvested profits, restructuring and state duties for discussion with your compliance team.
Track what happens next
The committee report is due on 13 November, with a Senate vote targeted for the third week of November. For context from the first hearing, read our Australia tax update on the earlier Senate hearing.
What is the proposed Australian trust tax?
The bills propose a 30% minimum tax on discretionary trusts. The proposal is still before Parliament and is not yet law.
When could the proposed rules start?
Under the current proposal, the tax would apply to income years beginning on or after 1 July 2028. A roll-over window is scheduled to open on 1 July 2027.