"Around three in five residential building businesses operate through trust structures.

"They are practical longstanding business structures used by thousands of family-owned builders, tradies and construction businesses to manage cash flow, invest in their business and planned for succession.

"If these reforms go ahead businesses will be forced to spend thousands of dollars on advice and restructuring simply to understand and comply with these changes.

“Our industry is growing increasingly frustrated by a constant stream of reforms that add complexity and cost while doing nothing to increase housing supply, improve productivity or boost investment.

“This policy would only compound the pressures on small businesses further and would deliver the wrong policy at the wrong time.

“Alongside the proposed tax on trusts, the Bill also contains provisions introducing a new definition of a residential dwelling for the purposes of the Negative Gearing and Capital Gains Tax housing tax settings.

"Everyone is talking about the tax on trusts, but almost no attention is being paid to the equally concerning housing measures buried within this legislation.

"The government says it wants more housing supply, yet the proposed definition is too narrow and too subjective and will exclude a broad range of housing supply options.

"Granny flats, multi-generational housing, substantial renovations and knock-down rebuilds all increase housing capacity and make better use of existing land and infrastructure yet they are excluded from the definition.

"If investment incentives are going to be tied to a definition of new housing, that definition must recognise the full range of housing solutions being delivered across Australia."

HIA is calling for the dwelling definition to be redrafted in consultation with industry and aligned with existing and well-understood new housing definitions already used within the GST tax system.

“Equally the Senate should use this Inquiry to reverse the own-goal ban on Self Managed Super Funds (SMSF’s) investing in new rental housing that has already seen a drop in new homes sales.

"Australia needs more homes, more investment and more confidence.

"The Senate has an opportunity to avoid repeating mistakes of the past by ensuring only thoroughly consulted, rigorously tested reforms proceed.

"Australia cannot tax, regulate and redefine its way to more homes. We need policies that encourage investment, support small businesses and make it easier to build, whereas this Bill would result in the opposite effect," concluded Ms Martin.

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