Proposed Trust Tax Changes Spark Small Business Backlash
Industry leaders warn new tax measures threaten the financial viability of family-operated businesses.
1Proposed Tax Reform Inquiry
The Australian federal government is initiating a two-day inquiry this Thursday regarding a proposed 30 per cent minimum tax on discretionary trusts. Originally flagged in the May budget, the policy aims to address concerns that trusts are being utilized to subvert the tax system, thereby placing an unfair burden on individual workers.
2Small Business Exemption Request
The Council of Small Business Organisations Australia is formally requesting that businesses with an annual turnover below $10 million be grandfathered from these changes. CEO Skye Cappuccio argues that the current proposal unfairly punishes family-operated entities that utilize legal trust structures primarily for asset protection rather than for tax avoidance purposes.
3Financial Impact on Owners
Industry representatives warn that the proposed legislation could force business owners to pay thousands of dollars in restructuring costs. Owners currently face a difficult choice between accepting significantly higher tax bills, undergoing expensive corporate restructuring, or electing a fixed-distribution regime that may prove too rigid for their specific operational needs.
4Criticism of Legislative Approach
Critics argue the government is targeting a legal business structure rather than addressing specific instances of misconduct. By failing to distinguish between genuine small businesses and those abusing the system, the policy risks penalizing hundreds of thousands of owners who rely on these structures for legitimate long-term financial and asset security.
5Proposed Mitigation Measures
Beyond the request for grandfathering, the Council of Small Business Organisations Australia has recommended that any necessary restructuring costs incurred by businesses should be made tax deductible. This proposal aims to alleviate the immediate financial strain placed on family-operated firms forced to adapt their legal frameworks to comply with new regulations.
6Broad Industry Opposition
The upcoming inquiry will feature testimony from a diverse coalition of industry peak bodies. Representatives from the National Farmers Federation, Housing Industry Australia, and Master Builders Australia are scheduled to appear alongside accounting experts to voice collective concerns regarding the potential economic impact of these tax changes on their respective sectors.
7Legislative Timeline and Process
The Labor-led committee overseeing the inquiry is tasked with evaluating the submissions and testimonies provided by various industry stakeholders. Following the conclusion of the two-day hearing, the committee is expected to finalize and hand down its formal recommendations regarding the proposed trust tax changes on November 13, 2026.
8Broader Economic Implications
The outcome of this inquiry will determine whether the government proceeds with the 30 per cent tax threshold or introduces concessions for smaller entities. If implemented without modifications, the policy could fundamentally alter how family businesses manage assets, potentially leading to widespread shifts in corporate structures across the Australian small business landscape.
Original article: PerthNow — Proposed Trust Tax Changes Spark Small Business Backlash