Family-owned and small-to-mid-tier property developers have been given just three weeks to respond to a federal government consultation paper on new taxes, after changes were announced without warning in the 2026/27 federal budget.
This included a 30% minimum tax on businesses operating through discretionary trusts, a structure used widely across the development industry.
The Government’s intention for businesses to restructure from discretionary trusts into companies will likely trigger stamp duties at the state level.
No compensation for additional stamp duties was contained in the budget, leaving businesses stuck between potential double trust taxation and an unplanned state duties bill that will directly harm new projects at a time of rising labour, materials and capital costs.
“This is a red tape nightmare," said Property Council CEO, Mike Zorbas.
"Every decent suburban accountant has been advising clients in the property sector to use trusts to structure their businesses efficiently for decades.
“The changes are complex and unwieldy.
"Three weeks’ consultation is an insultingly short period of time for organisations that face years of restructuring and unintended costs because of these changes.
Zorbas said the trust tax adds to an already heavy burden, following budget changes to both CGT and negative gearing settings.
"These new taxes come on top of CGT and negative gearing tax hikes in the budget and on top of $130 billion in tax already raised by taxes on property across governments," Zorbas said.
“The Government assures us that less than 15 per cent of small businesses will be affected.
"That is still almost 400,000 small businesses, and our members tell us it could affect far more than 15 per cent of small and medium-sized property developers."
Zorbas said this will impact small buisnesses.
"Worse still, no care has been taken to understand the time and cost impacts on small business restructuring" Zorbas said.
“Businesses that have been operating completely within the law now face significant legal costs and additional red tape with almost no consultation period.
“The Property Council is gravely concerned about the impacts these proposed changes will have on the mum and dad developers who are busy building the homes Australians need.
“The Government should drop its discretionary trust bill. With the property sector already reeling from changes to CGT and negative gearing it is the wrong tax at the wrong time.”
