The proposed minimum 30 per cent tax on discretionary trusts risks becoming the latest addition to a growing list of changes that are increasing costs and complexity for small businesses.

HIA Chief Executive Industry and Policy, Simon Croft, said the key challenge for small business is that policy changes are too often assessed individually, rather than through the lens of their cumulative impact.

"Small business owners don't experience each policy change in isolation. They experience them all at once and together.

"Businesses are already dealing with rising operating costs, workforce shortages, economic uncertainty and softer trading conditions in many parts of the economy.

"At the same time, they are being asked to adapt to a growing range of regulatory and workplace changes. Whether it is additional payroll obligations, minimum wage increases, superannuation changes, credit card payment reforms or tax measures, every new requirement adds another layer of administration, compliance and cost.”

Mr Croft said the proposed minimum tax on discretionary trusts is the latest example of a reform that needs to be considered in the context of the broader operating environment facing small businesses.

"Viewed in isolation, any one reform may appear manageable. But for a small business owner trying to run a business, employ staff and serve customers, it is the accumulation of all these changes that creates pressure.

"HIA estimates around three in five members operate through discretionary trusts. These are predominantly small and family-owned businesses including builders, tradespeople and contractors.

"The proposed trust tax would represent another cost and compliance burden for businesses that are already navigating significant economic and regulatory challenges and disproportionately impact smaller businesses.”

Mr Croft said small businesses continue to be the backbone of the housing industry and the broader economy, taking risks, investing capital, employing workers and training the next generation of skilled tradespeople.

"Every additional layer of compliance takes time away from running a business and getting on site building homes.

"Business owners consistently tell us they are spending more time dealing with paperwork and regulatory obligations and less time being on site training their employees and growing their business.

“If governments are serious about improving productivity, increasing housing supply and supporting small business investment, they need to better understand the cumulative impact of the decisions they are making.

"HIA's concern is not just with one proposal. It is with the layering effect of multiple policy changes that, taken together, make it harder to operate a small business in Australia,” concluded Mr Croft.

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