I'm a bit surprised this one's not attracted a thread here yet? But anyway, here goes:
"A crackdown on people using trusts to avoid paying income tax is not only fair, it will stop more than $17 billion leaking out of the federal budget, Labor argues.
The opposition has unveiled plans to impose a 30 per cent tax rate on payments to adults from discretionary trusts.
It says this will curb the legal but unfair practice of high income-earners funnelling money through trusts to lower-earning family members, thus avoiding paying top tax rates.
'The lucky few, riding the business end of the tax system are able to opt out of paying taxes,' Opposition Leader Bill Shorten told reporters in Sydney on Sunday."
I can see where they're coming from maybe in relation to a dude running a business and using a trust to distribute their $140K pa (or whatever) of income from that business activity tax effectively via 'income splitting' (as opposed to some poor oppressed hard working miner or public servant who's an employee and can't ... ) I suppose.
But what really does do my head in a bit is:
a) How come farmers are exempt (except because its political expedient to do so for now at least - Not that I'd personally support sticking it to farming families either!), and
b) Just what might the ALP see as being so morally wrong (???) about someone setting up a trust they move 'savings' (as in previously taxed income) into that they can then distribute the future income from those pre-taxed savings to family members as they wish/see as good for the family overall - Which yes, certainly may include doin' so 'tax effectively'?
Again and again I just keep being forced by the ALP into knowing in the very depths of my bones that they are an unbelievably (to me anyway) anti-family party - That very actively strives to break strong multi-generational families into fragmented discordant little isolated nuclear unit type ones and by doing so, quite actively seeks to make people dependent on them rather than on themselves within strong multi-generational families.
Hmmm - These Socialist cnts truly does do me head in Golly - I reckons they's really, Really, REALLY f***ed in tha head? But maybes it's me wot is? - LOL
I'm a bit surprised this one's not attracted a thread here yet? But anyway, here goes:
"A crackdown on people using trusts to avoid paying income tax is not only fair, it will stop more than $17 billion leaking out of the federal budget, Labor argues.
The opposition has unveiled plans to impose a 30 per cent tax rate on payments to adults from discretionary trusts.
It says this will curb the legal but unfair practice of high income-earners funnelling money through trusts to lower-earning family members, thus avoiding paying top tax rates.
'The lucky few, riding the business end of the tax system are able to opt out of paying taxes,' Opposition Leader Bill Shorten told reporters in Sydney on Sunday."
Here is what an accountant had to say on this issue.
Quote:
Discretionary Trusts and Bill Shorten by Ken Mansell
Today Bill Shorten will announce...... a minimum 30% tax on trust distributions to those over 18 years old
The only exemption we will get in the speech is that......it does not apply to charitable or farming trusts
So it looks like there will be a new tax, lets call it the Discretionary Trust Distribution Minimum Tax (or DTDMT because Treasury likes acronyms). The DTDMT will only apply to individuals who: • Receive a discretionary trust distribution in their individual tax return (I assume it will also cover a partnership distribution that is made up indirectly of a trust distribution or I have already worked out how to avoid the tax); AND • Who have other non exempt income of less than $37,000 (where the 32.5% tax rate kicks). The tax will be the difference between what they would have paid on the discretionary trust distribution and what they would have paid at 30%.
My four thoughts are this... 1. This does not mean there are no benefits in income streaming from discretionary trusts, but they are just less. You would still distribute to the uni student kids but instead of them paying no tax on the first $18,200, they will pay 30%... But this is still 17% less than what the other beneficiaries might have to pay! Income splitting is still worthwhile with discretionary trusts. 2. Discretionary trusts still get asset protection and the various CGT concessions so we will still use them. 3. Why do farmers always get all the best concessions? 4. If you still want perfect income splitting without the pain of the 30% DTDMT you have two choices. First is set up a company that has different classes of shares, one for each potential beneficiary, where the directors can choose how much to pay each beneficiary and have the income arise in this company. You lose the CGT benefits if you sell the CGT assets out of the company but you have your income splitting.
The second idea will probably be the first thing the Commissioner reviews as you just put a company owned by each potential beneficiary (or at least the important ones) between the trust and the individuals. Effectively, instead of the individuals being the potential beneficiaries of the trust, the individual's 100% owned company is the potential beneficiary.
There is a combination of the first and the second idea where you make the company with the classes of shares a beneficiary of the discretionary trust and the trust distributes to the company and the company splits its dividends to whoever the directors want to. Did someone say Part IVA?
This proposed change only raises $17 billion over 10 years and that will be larger at the back end so it is about $1 billion a year at the moment. Given the estimates of the tax lost due to income splitting using discretionary trusts are between $2 billion and $3.5 billion (the $3.5 billion by the Australia Institute who have an agreement with the Labor think tank so this will be dodgy) this will only half the benefit these trusts give.
In summary, using discretionary trusts will still be beneficial under president Shorten. But as always, we will find a way around their best laid plans...
Take risks - if you win you will become wealthy, if you lose you will become wise
All ya'd get ta be under tha f***in' Labor Party these days is an effin' serf I'd reckon mate. Coz if ya ever actually got ta be a real farmer (or businessman, or entrepreneur or pretty much any sort of successful hardworking, 'n dare I say it, even 'smart' type at all) they'd be shittin' their sorry sordid envious jealous little Socialist nappies they just mightn't be able ta smash ya family 'n make ya all dependent on 'em for all tha various pathetic grubby demeaning little handouts they wants ta promise all their various pathetic grubby demeaned little supporters - Ta buy enough votes ta get their sorry sad worthless Socialist anti-family arses inta power.
Oh well, that's life in Oz at this time I 'spose ...
This will affect me. Might be time to close my family trust soon. Had a good run for 10 year.s
It probably won't affect you at all.
Lets say you have two kids who you now distribute $18,200 income to each which then allows your family a total of $36,400 of untaxed income. Under this regime you simply put your two children on the payroll and pay them $18,200 each which is still untaxed income totalling $36,400 for your family.
No change.
Ex BP Golly
1 Aug 2017, 08:51 AM
It's almost impossible to get banks to loan for buying farm land, especially first time buyers of farm land.
Actually it's exactly the same as it was 50 years ago.
Lets say you have two kids who you now distribute $18,200 income to each which then allows your family a total of $36,400 of untaxed income. Under this regime you simply put your two children on the payroll and pay them $18,200 each which is still untaxed income totalling $36,400 for your family.
No change.
If the ALP get in and implement this trust change I don't think it will be as simple or risk-free as this.
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