Labor’s Proposed Changes to Trust Rules
Changes to trust rules. You’ve probably heard the recent news (or uproar) concerning Labor’s proposal to tax distributions from family trusts at 30%.
If not, here’s your all your need-to-knows …
Business Insider Australia reported, “Opposition leader Bill Shorten has announced plans to tax distributions from family trusts at 30% as Labor targets wealthy people using trusts to cut their tax bill.”
Confused already? that’s ok!
So what does this all mean?
In short, ALP is striving to bridge the gap between our “two-class tax system” (as Bill shorten calls it), aiming to target the top 2% of the county’s wealthiest people. Effective from 1 July 2019, the plan is to tax all distributions from discretionary trusts at 30%, to avoid the increasingly popular practice of minimising tax expenses through “income splitting” via family trusts.
So the question that remains, how could it affect you ?
Despite APL stressing 98% of taxpayers will see no change as a result of the alleged new tax rate, it will be applied to those over the age of 18.
There are approximately 642,000 discretionary trusts operating in Australia. Labor predicts this new policy would affect 315,000 of these trusts.
It is not uncommon for small businesses to operate via a trust structure for their posed benefits such as asset protection, access to small business capital gains tax concessions and flexibility with capital distribution.
Questions? Concerns? Want a coffee?
If you would like to speak to one of our qualified accountants about the proposed changes, or if you have any general queries that our experts can handle. Please do not hesitate to contact us on 07 3367 3155.