In its submission on the draft exposure legislation, HIA has raised serious concerns about the broad impact the proposed changes would have on residential building businesses, with around three in five HIA members operating through a family trust structure.

HIA Managing Director Jocelyn Martin said the proposal would have consequences far beyond taxation, affecting how many small businesses are structured and operated.

"For many Australians, a family trust may sound like a structure reserved for wealthy investors. In reality, family trusts are a common and legitimate way for tradies, builders and small family businesses to operate," Ms Martin said.

"Around three in five HIA members operate through a family trust. When you introduce a minimum tax on trusts, you are effectively introducing a new tax on a significant proportion of Australia's building industry.

"Family trusts are a practical and longstanding business structure that helps builders manage risk, protect assets, plan for succession and operate sustainable family-run businesses."

Ms Martin said the proposed changes risked triggering a wave of costly and complex business restructures across the building industry.

"The impact of a minimum trust tax extends well beyond tax. For many builders, it could require significant restructuring of their business operations, with potential implications for licensing, insurance arrangements, financing facilities, contractual obligations and broader business management.

"These are not simple changes. Builders would need to spend considerable time and money working with accountants, lawyers, insurers and regulators to determine how their business should operate under a new regime.

"For a small building business, changing structures is not as simple as completing paperwork. It can affect everything from builder licensing and insurance cover through to banking arrangements and existing contractual relationships.

"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.”

Ms Martin said the proposal comes at a time when building businesses are already facing significant cost pressures and workforce shortages.

"Residential builders are already grappling with rising insurance premiums, increasing workplace obligations, escalating regulatory costs and ongoing labour shortages. The industry does not need another policy that adds complexity, cost and uncertainty.

"Every dollar absorbed by additional tax liabilities, professional advice and business restructuring is a dollar that cannot be invested in employing staff, taking on apprentices, purchasing equipment or growing a business."

Ms Martin said policymakers should remain focused on increasing housing supply and supporting the businesses responsible for delivering new homes.

"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.

"Every hour spent navigating unnecessary business restructures is an hour not spent building homes.

"At a time when governments are asking industry to build more homes and help address Australia's housing shortage, the last thing builders need is uncertainty about how their business structures will be treated.

"If governments are serious about achieving their housing targets and improving housing affordability, they should be looking for ways to back the small businesses that build homes, not imposing new taxes and additional complexity on them.

"At a time when Australia needs more tradies, more builders and more homes, the last thing our industry needs is a new tax on tradies dressed up as a tax on trusts,” concluded Ms Martin.

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