The Housing Industry Association has urged the Federal Government to abandon plans for a minimum tax on discretionary trusts, arguing the proposal would make it harder for small building businesses to deliver the new homes Australia needs.
The industry body’s submission to Treasury’s consultation on the proposal says the measure conflicts with the Albanese Government’s efforts to lift housing supply, warning it would increase costs and complexity for many family-run builders.
HIA Managing Director Jocelyn Martin said the proposal exposed what she described as a contradiction in the government’s approach to housing.
“Every week governments tell Australians they want more homes. Every month it seems there is another tax or piece of regulation that makes building them harder,” Ms Martin said.
She pointed to Treasury’s own consultation paper, saying it acknowledged the proposal would increase compliance costs, require businesses to restructure and add complexity.
“The extraordinary aspect of the proposal is that Treasury’s own consultation paper acknowledged it would increase compliance costs, require businesses to restructure and create additional complexity,” she said.
Ms Martin said discretionary trusts were a common business structure used by family-owned building companies rather than complex tax arrangements.
“Discretionary trusts aren’t some exotic tax vehicle. They’re one of the most common ways family-owned building businesses are structured,” she said.
She said builders often used trusts to allow family members to operate the business together, prepare for succession or manage fluctuating workloads and income.
“A local builder might operate through a trust because it allows a husband and wife to run the business together, brings adult children into the business as they prepare to take it over, or provides the flexibility small businesses need when workloads and income fluctuate from year to year,” Ms Martin said.
“These aren’t multinational corporations with teams of tax lawyers. They’re builders employing apprentices, paying local suppliers and building homes in communities across Australia.”
The HIA submission calls on Treasury to publish a detailed assessment of the proposal’s economic impact, including legal, accounting, valuation and administrative costs, as well as state taxes such as stamp duty that businesses could face if they are required to change their structures.
It also questions the revenue Treasury expects the measure to generate, arguing the Government should release the assumptions behind its estimates if businesses are expected to alter their behaviour in response to the tax.
Ms Martin said the practical effect of the proposal would be to divert money away from investment in housing businesses.
“The Government says this is about fairness, but the practical reality is a builder who wants to employ another apprentice or invest in new equipment could instead be paying accountants, lawyers and stamp duty simply to states and territories to restructure their business. That doesn’t build a single extra home,” she said.
The industry body said it had repeatedly warned against tax measures that could discourage investment in housing while Australia continued to face a shortage of new homes.
“Australia doesn’t have a tax collection problem. It has a housing supply problem,” Ms Martin said.
“Until every tax and regulatory decision in Canberra is judged by one simple test, does it help build more homes? Australia’s housing targets will remain exactly that: targets.”
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