Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

This popular tax strategy is headed for the chopping block

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. 

Advertisement
Advertisement

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. 

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. 

 

This popular tax strategy is headed for the chopping block
Chris Bowen
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Anonymous - There are so many crackdowns by the ATO it’s a wonder that anyone has enough unbroken bones on which to walk.....
Anonymous - Low as in a new low for scoundrels depleting your savings?....
Bronson - I love you Brenton please write more....
The Patriot - It seems madness to lower interest rates when we know that we will need room to drop later as the economy slows on back of China slowing. If wages do.......