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This popular tax strategy is headed for the chopping block

By Reporter · May 10 2019
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Chris Bowen
This popular tax strategy is headed for the chopping block

This popular tax strategy is headed for the chopping block

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By Reporter · May 10 2019
Reading:
egg
egg
egg
Chris Bowen

Wealthy Australians are not happy about a proposal from the Labor Party that will impact a popular tax planning strategy. 

Labor’s plans to introduce a 30 per cent tax on discretionary trust distributions to adults, which it announced this week, will collect about $7.7 billion in the next three years and close to $27 billion in the next 10 years. 

A discretionary trust is one that is set up by a person who then has the right to choose the amount of money that would be paid to a beneficiary. 

Shadow treasurer Chris Bowen said the tax strategies associated with trusts are frequently used by wealthy Australians to minimise their tax bill. 

According to Labor, its policy will only apply to discretionary trusts and will not apply to special disability trusts, testamentary trusts (deceased estates), fixed trusts, cash management unit trusts, fixed unit trusts and public unit trusts (listed and unlisted). Charities will also have special exemptions. 

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Other tax changes are in the works

Labor has a whole host of other tax changes on the table for Australian investors. 

The most controversial of them is the plan to scrap cash refunds on excess dividend imputation credits or, in other words, the cash handout investors receive for putting their money into Australian companies. 

You can read more about this here. 

 

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