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Trust income tax reforms are a worry

As a Taxation Accountant for over 30 years, and dealing with many Trust entities in this time, it is concerning the way the Government is proposing to handle the trust income taxation reforms as recently released in draft legislation.

The recently released draft legislation, if legislated as is, will remove capital gains and franked dividends derived by trusts from current taxing arrangements and subject them to a different taxing regime.

Not only is the Governments’ handling of the trust income taxation reform not allowing enough time consultation with the industry, but contemplating complex new legislation that relates to the current financial year is inappropriate.

While releasing the draft legislation, the Governments’ Minister Bill Shorten explained that the early release of the legislation was “to ensure that interested stakeholders have the maximum opportunity to comment on the core changes proposed” in the legislation. 

Whilst it is also true that the draft explanatory memorandum states that the final legislation will clarify matters, this is not good enough.  Taxpayers need certainty for this financial year.

And although in March 2010, the Australian Taxation Office did provide a one year amnesty for all taxpayers utilising Trusts as an effective way of solving this problem, this is not enough time to allow for further consultation with the Government.

The amnesty period should be extended by at least two more years to provide the time needed for further consultation and allow the Government to provide a complete overhaul of the existing trust income tax rules.

If you would like further information please call me, Paul Baggetta, on 9317 7300.
 

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