Labor's trust issues - Chartered Accountants

CHARTERED Accountants Australia and New Zealand has called on the Australian Labor Party to embrace indirect tax reform if it is to develop the sustainable tax base necessary to pay for the many important social investments outlined by Opposition Leader Bill Shorten in his speech today (July 30).

Head of Tax, Michael Croker, said Chartered Accountants ANZ would continue to advocate for a broad base, low rate personal tax system, with greater reliance on indirect taxes such as GST and stronger measures to address tax evaded in the black economy.

Mr Croker noted Mr Shorten’s references to inequality but expressed disappointment over the lack of a comprehensive plan to tackle this issue by more broadly reforming Australia’s tax and transfer payment systems.

“What we’re seeing from the major parties is a piecemeal approach, with a bit of extra income tax tacked on here and a specific deduction denied there,” Mr Croker said.

“The message conveyed is that something is being done to someone else to tax them more heavily.

“Meanwhile, Australia’s income tax system remains dangerously over-reliant on PAYG collected from Australians in the top tax brackets and company tax paid by a comparatively small group of large companies.”

Nonetheless, Chartered Accountants ANZ had already spoken to Andrew Leigh’s office and offered to work with the ALP to flesh-out its 30 percent minimum tax proposal for discretionary trusts before the next Federal Election.

“Today’s speech and accompanying Fact Sheet are light on specifics for a legitimate structure used widely for business, personal investment and family purposes,” Mr Croker said.

“Accountants and their clients seek certainty, particularly when new policies impact existing structures established in accordance with laws now described by those who enacted them as unfair.

“There are already a number of emerging questions about Labor’s model”, he said.

They include:

•   The equity of treating active small businesses differently from farmers.

•   Addressing the potential for over-taxation (compared to the tax outcome if the beneficiary simply derived the income directly), particularly for business trusts.

•   Restructuring relief for those who may wish to exit discretionary trust structures.

•   The scope of carve-outs for farm trusts, testamentary, disability and charitable trusts.

Mr Croker said Labor’s minimum tax would start many conversations, and said there could be concern in some quarters that minimum tax might be embraced for other taxpayer segments.

He said Chartered Accountants in Australia would be disappointed by the disparaging references to their profession in Mr Shorten’s speech today.

“With his parliamentary and ministerial experience, Mr Shorten knows better than most the role CAs play in helping Australians and businesses prosper. He would also know that Chartered Accountants ANZ is a highly trusted contributor to consultation forums established by government and regulatory agencies such as the ATO, advocating in the public interest.” 

www.charteredaccountantsanz.com

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