The 2026-27 Federal Budget, Part 9: From Sole Trader to a Proper Structure and What Business Owners Need to Know
- Zac Hayes
- May 31
- 7 min read
A lot of business owners start the same way.
You launch the business quickly, use your own ABN, keep things simple, and focus on bringing in work and generating income.
And honestly, that makes sense in the early stages.
But as the business grows, things start to change.
The income increases.
The risk increases.
The tax bill increases.
And eventually, many business owners reach the point where they start asking:
"Is my current setup still the right one?"
After the 2026 Federal Budget changes, that question has become even more important.
Because a lot of business structures that worked well in the past now need reviewing and, in some cases, redesigning.
A note on timing: several of the Budget measures mentioned in this article are announced and not yet law. They are subject to legislation passing Parliament and the final design may change.
Why Structure Matters More as You Grow
When a business is small, operating as a sole trader can work fine.
It is simple and relatively cheap to run.
But over time, problems often start appearing.
For example:
• Higher personal tax bills
• No separation between business risk and personal assets
• Difficulty building wealth outside the business
• Limited flexibility around income planning
• Poor succession planning
• Exposure to lawsuits or business debts personally
The bigger the business becomes, the more important the structure becomes.
Because structure is not just about tax.
It is also about:
• Asset protection
• Long term wealth building
• Retirement planning
• Flexibility
• Family planning
• Future investment opportunities
What Changed After the 2026 Budget?
The 2026 Federal Budget announced several major areas around:
• Trust taxation
• Capital gains tax
• Investment income flowing through trusts
• Long term structuring strategies
One of the biggest proposed changes is that discretionary trusts are expected to face a minimum 30% tax on the trust's taxable income at the trustee level from 1 July 2028.
That means many older trust structures now need updating.
Especially structures that relied heavily on traditional trust income distributions.
What Most Business Owners Are Doing Now
For many business owners, the conversation is no longer simply:
"Should I have a trust?"
The conversation is now:
"What structure works best moving forward under the new rules?"
That is a very different discussion.
And increasingly, many structures now involve a combination of:
• Companies
• Family trusts
• Share classes
• Investment entities
• SMSFs
Each part has a different job.
The goal is building a structure that works together properly long term.
Most business owners restructure too late. Once profits and assets have built up, the cost and complexity of moving them increases significantly.
The Business and Wealth Collective's Post-Budget Trust and Company Structure Strategy Session can help you understand whether your current setup is still the right fit, and what the new rollover relief window may mean for you.
The Most Common Trigger for a Restructure
Most people do not restructure because they suddenly love paperwork.
They restructure because the business reaches a point where the current setup no longer works properly.
Some common triggers include:
• Profits growing significantly
• Buying investment property
• Wanting better asset protection
• Planning for retirement
• Bringing family members into the business
• Planning for a future sale
• Existing structures becoming inefficient after the Budget changes
For many business owners in 2026 and 2027, the new Budget rules are now the main reason they are reviewing their structures.
Step 1: Understanding the Current Position
Before changing anything, the first step is understanding exactly what already exists.
That includes reviewing:
• Existing companies
• Trusts
• Business entities
• Loans between entities
• Property ownership
• Investments
• Tax positions
• Future goals
This step is incredibly important.
A restructure done properly should be based on strategy.
Not guesswork.
Step 2: Designing the Right Structure
There is no one size fits all structure.
The right setup depends on:
• Business income
• Family situation
• Investment goals
• Retirement planning
• Risk exposure
• Long term wealth goals
But for many established business owners, the structure often includes:
A Family TrustUsually used for:
• Asset protection
• Family control
• Long term wealth planning
A Trading Company
Usually used for:
• Running the business
• Earning business income
• Retaining profits
Share Classes
Increasingly important after the Budget changes.
Different family members may hold different classes of shares to help create flexibility around dividends and income flow.
Investment Structures
Sometimes separate entities are used for:
• Property
• Shares
• Investments
• Building wealth outside the trading business
SMSFs
Often used for long term retirement wealth and commercial property ownership.
Why Share Classes Matter More Now
This is one of the biggest changes after the Budget.
Historically, many families relied heavily on trust distributions.
Now, many structures are shifting more toward company share classes.
In simple terms:
Different family members can own different classes of shares.
For example:
• Mum holds A Class shares
• Dad holds B Class shares
• Adult children hold C Class shares
The company may then potentially pay dividends differently between those share classes.
This creates more flexibility moving forward under the new rules.
Step 3: Setting Up the New Entities
Once the strategy is clear, the next step is creating the structure properly.
This may include:
• Setting up companies
• Establishing trusts
• Registering ABNs and TFNs
• Opening bank accounts
• Preparing constitutions
• Drafting trust deeds
• Setting up share classes correctly from the start
Doing this properly matters.
Trying to patch together structures cheaply later often creates bigger problems.
Step 4: Moving Assets Carefully
This is where restructures can become complex.
Because moving assets may trigger:
• Capital gains tax
• State stamp duty
• GST issues
• Loan complications
This is why restructures need proper modelling before anything is transferred.
Sometimes the best strategy is not moving existing assets at all.
Sometimes it is buying future assets in the new structure instead.
Every situation is different.
The New Rollover Relief Window
One major Budget announcement that received less attention is the new restructure rollover relief window.
From 1 July 2027 to 30 June 2030, certain restructures out of discretionary trusts are expected to receive tax relief.
In simple terms:
Some families may be able to restructure assets into better long-term structures without triggering the same level of income tax and capital gains tax consequences that previously existed.
Importantly, this proposed rollover relief is a federal income tax and CGT measure. State stamp duty is generally separate and may still apply, so the full cost of a restructure needs proper modelling state by state.
This could become extremely important for families with older trust structures.
But proper advice will matter enormously once the detailed legislation is finalised.
Why Many Business Owners Delay Too Long
One of the biggest mistakes we see is waiting too long.
Because restructuring after major growth usually becomes:
• More expensive
• More complicated
• More tax intensive
Good planning early often creates far more flexibility later.
If you are unsure whether your sole trader setup, trust structure, company or investment strategy still makes sense after the new Budget changes, now is the right time to review it properly.
Book your Post-Budget Trust and Company Structure Strategy Session before EOFY.
The Biggest Misunderstanding About Structures
A lot of people think restructuring is purely about reducing tax.
But that is only one part of the conversation.
Good structures are also about:
• Protecting family wealth
• Separating business risk
• Planning for retirement
• Building investments
• Succession planning
• Creating flexibility for future opportunities
The best structures are designed to support long term wealth creation, not just this year's tax return.
When a Restructure May Not Be Worth It
Not every business needs a complicated structure.
In some situations:
• The business is still too small
• The compliance costs outweigh the benefits
• The owner is planning to sell soon
• The family situation is uncertain
• The current structure already works well
Sometimes only small updates are needed rather than a full restructure.
That is why proper strategy advice matters first.
Final Thoughts
The 2026 Budget changed a lot of the old structuring strategies.
But it did not remove the importance of good planning.
If anything, it made proper structuring more valuable than ever.
The business owners who usually build lasting wealth are not simply focused on reducing tax today.
They focus on:
• Long term planning
• Asset protection
• Cash flow
• Flexibility
• Retirement planning
• Family wealth
Because the real goal is not just running a successful business.
The real goal is turning that business into long term financial security.
Know Whether Your Current Structure Still Works
Every business owner's situation is different. The right structure depends on your income, your business, your investments, your family goals, your retirement plans and your long-term vision.
Book your Post-Budget Trust and Company Structure Strategy Session with The Business and Wealth Collective.
General Information Disclaimer
This article provides general information only and does not take into account your personal circumstances, objectives, financial situation, tax position or legal structure. It is not personal tax, financial, legal or investment advice.
The Federal Budget measures discussed in this article were announced on 12 May 2026 and many require legislation, regulations, ATO guidance or further program detail before they take effect. The final rules, eligibility criteria, thresholds, timing and practical outcomes may change.
Before making decisions about tax, superannuation, property, trusts, business structures, investments, asset sales or contributions, you should obtain advice based on your specific circumstances.
The Business & Wealth Collective can help you review your position and identify which areas may require further advice before EOFY.
Tax agent services within The Business & Wealth Collective are provided by Configured Business Solutions Pty Ltd (Tax Agent No. 26109304).
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