Trust tax overhaul could hit 90,000 builders, including in WA

Master Builders Australia says Labor’s planned 30 per cent tax on discretionary trust distributions, due to start 1 July 2028, will hit more than 90,000 construction businesses nationally, including family building and trade firms in Western Australia, as a Senate committee works through the bill ahead of a final report due 13 November 2026.

Why it matters

The House of Representatives passed the trust tax bill last month, and it is now before the Senate economics committee. Discretionary trusts are a common structure for small, family-owned building and trade businesses, including in WA. The Nightly describes them as arrangements where beneficiaries can be changed, often to shield business assets. Master Builders Australia chief executive Denita Wawn argues the tax will lift building costs that firms will pass on to clients, without adding a single home. “It is unrealistic to expect small businesses to absorb costs of this magnitude without significant consequences,” Ms Wawn said, according to The Nightly. Firms could sidestep the tax by converting to a fixed trust, which locks in who receives distributions, though The Nightly said that switch carries a large legal bill. The Nightly also reported Labor’s broader housebuilding target, 1.2 million new homes over the five years to June 2029, is already 262,000 homes behind schedule, a shortfall the industry says a new tax on small building firms will not help close.

The numbers

Master Builders Australia’s estimate, published in its “Trusts Tax will hit small business and home buyers” release, puts the number of affected construction businesses nationally at more than 90,000. The Nightly reported modelling showing a family-owned builder with $400,000 in taxable income could face annual compliance costs of $21,000 to $67,500 under the new tax, plus a one-off restructuring cost of $82,000 to $175,000 if it switches trust structures to avoid the hit. Neither Master Builders Australia nor Master Builders WA has published a WA-specific breakdown of the 90,000 figure.

What’s next

The Senate economics committee’s report on the bill is due 13 November 2026, after which the Senate will vote on whether the tax proceeds in its current form. Master Builders Australia has put its case to the committee in a written submission. The discretionary trust tax is a separate federal measure from WA’s own construction trust law change, which makes head contractors trustees of payments on state building jobs; one taxes trust income, the other regulates who holds payment funds on a project. For a Perth family building company structured as a discretionary trust, the practical choice on the table is the same one facing builders nationally: absorb a new annual tax bill on trust distributions, or pay tens of thousands of dollars to restructure, costs Master Builders says will end up with clients and homeowners.