The profit question every $2m+ builder should be asking
A builder turning over $2 million and rising faces a question that small operators never have to answer: where should the profit sit? At lower turnovers, the choices are limited and the stakes are small. At $2m and above, profit starts to land in serious amounts — and where it lands determines how much of it you keep.
Tax minimisation for a high-turnover builder is not a June trick. It is a structural discipline, built across the year, that puts every dollar in the right place, at the right time, inside the right vehicle — fully compliant, fully defensible, and fully working for you.
Why $2m changes the game
Below $2m, a builder can often get away with drawing profit and paying tax at marginal rates. Above $2m, that approach costs real money. The profit is large enough that the structure it sits in, the timing of its recognition, and the vehicle that holds it all make a material difference to how much the business retains.
At the same time, a $2m+ builder carries the QBCC licence layer. The structure has to satisfy the regulator — NTA, current ratio, maximum revenue — as well as the ATO. A tax strategy that ignores the licence is a strategy that can cost you the licence.
The structural levers for a $2m+ builder
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Entity structuring to cap personal exposure. Profit sitting in the right entity — a company, a trust where appropriate, a combination — caps the rate at which it is taxed and the exposure of the individual behind it. The structure is engineered, not inherited.
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Division 7A and trust distribution strategy. Where loans move between entities or trusts distribute to beneficiaries, the rules are strict. Done right, profit moves lawfully to where it is taxed least. Done wrong, Division 7A turns a loan into an unfranked dividend and a tax bill that should never have existed.
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Capital gains tax planning and small business concessions. A builder selling a business, a property, or a major asset faces a CGT event that, unplanned, can consume a large share of it. The small business CGT concessions — the 15-year exemption, the 50% active asset reduction, the retirement exemption — are substantial, structural, and available only to those who plan for them.
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Year-round planning, not June panic. The strategies that actually save tax are built through the year — the timing of major purchases, the structuring of distributions, the management of WIP and billings — not improvised in the last two weeks of June.
Where the QBCC and the ATO intersect
This is the part most accountants miss. A tax strategy for a licensed builder has to work for two masters:
- The ATO wants profit recognised and taxed correctly.
- The QBCC wants NTA, current ratio, and maximum revenue evidenced and maintained.
A tax move that strips profit out of the licensed entity can also strip NTA out of it — and the licence fails. A distribution that lowers tax can also lower the current ratio — and the licence fails. A structure that minimises tax but holds the licence in a trust can force a deed of covenant against personal assets — and the protection fails.
The right strategy optimises for both. Profit sits where it is taxed efficiently and where it supports the licence. Distributions are timed to lower tax and preserve the current ratio. The structure minimises exposure and keeps the licence in a company that stands on its own.
How regular catch-ups keep the strategy aligned
A tax strategy that is set once and forgotten drifts. The only way to keep it aligned to both the ATO and the QBCC is to review it through the year. On a fixed cadence of catch-ups, we:
- Track profit against the structure, so distributions and retention decisions are made with current numbers, not year-end guesses.
- Watch the NTA and current ratio alongside the tax position, so a tax move never breaks the licence.
- Time major purchases, billings, and distributions across the year, so the strategy compounds rather than reacts.
- Plan the CGT position ahead of any sale or asset event, so the concessions are available when they are needed.
- Review Division 7A and related-party dealings every period, so a compliance issue is caught before it becomes a tax bill.
A builder who reviews this in March acts on it in April. A builder who reviews it in July has already missed the window.
How we help
We work with $2m+ builders to minimise tax without breaking the licence:
- We confirm your structure, your licence position, and your tax position — and tell you whether they are working together or against each other.
- We engineer the structure to cap personal exposure and support the licence at the same time.
- We manage Division 7A, trust distributions, and CGT planning across the year, not at year-end.
- We set up a fixed cadence of catch-ups where the tax strategy and the licence position are reviewed together — because they only work together.
If you are turning over $2 million and you do not know where your profit is sitting, why, and what it is costing you, that is the conversation to have. Call the direct line — we will confirm the position and set up the catch-ups that keep more of what you build.
