Trust Tax Reform Could Disrupt Broker Accreditations

Three peak industry bodies warn the government's 2028 trust tax plan carries risks well beyond the tax bill for mortgage and finance brokers.

Three of the finance broking sector's peak industry bodies have sounded a warning about proposed changes to trust taxation that could create significant disruption for mortgage and finance brokers — well beyond what a tax debate might suggest.

The federal government's proposed minimum 30 per cent tax rate on discretionary trusts, scheduled to take effect from 1 July 2028, has been framed largely as a tax equity measure. But the Council of Small Business Organisations Australia (COSBOA), the Commercial & Asset Finance Brokers Association of Australia (CAFBA) and the Mortgage & Finance Association of Australia (MFAA) say the regulatory consequences for brokers operating through trust structures have been almost entirely overlooked.

The Trust Tax Proposal — and Why It Affects Brokers

Around 350,000 Australian small businesses currently operate through discretionary trusts, with government budget papers suggesting approximately 210,000 small family businesses could face a higher tax burden once the 30 per cent minimum rate applies.

The government has provided a rollover relief window — from 1 July 2027 to 30 June 2030 — for businesses seeking to restructure ahead of the new rules. That window sounds generous, but for brokers operating through trust structures, the challenge extends well beyond the tax bill itself.

Australian Broker reports that COSBOA, CAFBA and the MFAA are warning that brokers forced into new business structures may need to renegotiate lender accreditation agreements, revisit aggregator contracts, and — critically for mortgage brokers — reassess their Australian Credit Licence or Credit Representative arrangements before they can keep operating.

CAFBA chair of advocacy David Gandolfo was direct about the scale of the problem. "A midsized broking firm could face renegotiating up to 50 separate lender accreditation agreements, with no guarantee the new terms would be accepted. Break costs could apply where loan assignments aren't possible," he said.

Gandolfo underlined the sector's broader economic significance: "Commercial finance brokers arrange around 72% of Australia's commercial equipment finance. Any disruption to that accreditation network ultimately affects the small businesses relying on brokers to access the capital they need to purchase equipment, invest and grow."

Why Mortgage Brokers Face a Particular Burden

For mortgage brokers, the density of existing regulatory arrangements makes any trust restructure significantly more complex than it would be for an unregulated business. An Australian Credit Licence or Credit Representative arrangement is tied to the legal entity that holds it. Changing that entity could trigger a fresh accreditation process with lenders and potentially require new licensing arrangements with the regulator.

MFAA chief executive Anja Pannek explained the challenge plainly: "Mortgage and finance brokers help Australians secure more than 80% of new residential home loans and support thousands of small businesses to access finance. Any reforms should minimise unnecessary disruption for these businesses while still achieving the Government's policy objectives."

COSBOA chief executive Skye Cappuccio put the compliance burden in concrete terms: "For some regulated small businesses, restructuring could mean unpicking commercial and regulatory arrangements that have taken years to build. That is not a simple transition. It risks creating cost, delay and disruption for small businesses already operating in a difficult environment."

The rollover relief window addresses the tax timing issue — but it does nothing to smooth the regulatory and contractual pathway that a trust-to-company restructure would trigger. A broker restructuring primarily to avoid the higher tax rate could inadvertently disrupt the lender relationships that took years to establish.

What the Industry Is Calling For

The three peak bodies are collectively calling on the government to either exclude or grandfather small business trading trusts from the proposed changes, or at minimum to provide practical transition arrangements that limit disruption to licensing, accreditation and lending access.

The rollover relief window opens on 1 July 2027 — less than a year away. The lead time required for legal advice, lender discussions and potential licensing changes means planning needs to start well before that date, not after.

What Brokers and Borrowers Should Know

If your broking business operates through a discretionary trust, the time to act is before the rollover window opens. Talk to your aggregator about how a restructure would affect your network agreements. Get legal and accounting advice on the full picture — tax and regulatory — before committing to a path.

For borrowers, this matters because any disruption to the broker accreditation network could affect the breadth of competitive lending options available in the market. Brokers handle more than 80 per cent of new residential home loans, and that broker competition is a key driver of the range of products borrowers can access. If you are currently reviewing your home loan, our refinance guide covers today's options, and our refinance savings calculator can help you estimate what a better rate could mean for your repayments.

The peak bodies' full statement on the proposed changes is covered in detail by Australian Broker.