7 years ago
SUPPORT FOR REFORM TO THE TAXATION OF TRUSTS AND LABOR’S PLANS
CHRIS BOWEN MP
The Liberal Party is alone in arguing there’s no problems with income splitting through discretionary trusts - and all of the problems that leads to in terms of unfairness in the tax system and revenue leakage and higher taxes for other Australians.
Reform of the taxation of trusts has at various times been pursued by former Liberal Treasurers Howard, Costello and Hockey. They all knew that discretionary trusts afforded opportunities for the wealthy to income split and minimise tax in a way that ordinary PAYG earners could never hope to.
This is a snapshot of calls for reform of the taxation of trusts and Labor’s plans for a Fairer Tax System for all Australians:
“This income splitting is a substantial issue. It’s grown very fast. We’ve seen very rapid growth of these kind of discretionary Trusts over the last decade at a time when the number of businesses hasn’t grown anything like that fast. What it shows is essentially structuring your affairs to split your income and minimise tax is an activity that has been growing a lot faster than businesses. One of the virtues of sensible tax reform, and this is sensible tax reform, is that it says don’t put your efforts into just trying to find ways around the tax system. Put your effort into finding a way to run a real business, that makes real money, employs real people, and that’s where you should be focusing your effort, rather than spending time with your accountant figuring out how to pay a bit less tax than the guy down the road, even though he’s got the same income.”
JOHN DALEY, CEO, THE GRATTAN INSTITUTE, ABC THE BUSINESS, 31 JULY 2017
"It's a carefully crafted, clever, well-directed attempt to deal with what are perceived to be the worst cases of abuse in the area of discretionary trusts."
ADJUNCT PROFESSOR ROBERT DEUTSCH, TAX INSTITUTE’S SENIOR COUNSEL, RADIO NATIONAL BREAKFAST, 31 JULY 2017
“It is, or at least should be, a no-brainer: income splitting is a device that should have been removed long ago.”
“If distributing income to a dependent child is wrong, as decreed by John Howard and embedded in Division 6AA, then so is distributing it to a dependent spouse, or to a brother or sister who promptly gives the distributed cash back as a gift.”
ALAN KOHLER, COMMENTATOR & PUBLISHER OF THE CONSTANT INVESTOR, THE AUSTRALIAN, 31 JULY 2017
“The current income tax treatment of the discretionary trust is grossly inequitable compared to other entities and other taxpayers. It causes large losses of tax revenue and significantly undermines the integrity of our income tax system; it is widely seen as a joke.”
“Labor’s approach involves minimal change to the tax law thereby not adding complexity and administrative costs.”
“Labor ought to be congratulated for tackling the discretionary trust stain on our income tax system.”
ASSOCIATE PROFESSOR DALE BOCCABELLA, UNSW, THE GUARDIAN, 31 JULY 2017
“So our top marginal tax rate of 45 per cent kicks in at $180,000 in income a year. You really need to be generating income substantially above that level for this to be adding value to you as a tax planning strategy.”
PROFESSOR MIRANDA STEWART, ANU’S TAX AND TRANSFER CENTRE, RADIO NATIONAL, 31 JULY 2017