The planned shakeup of the tax treatment of Australia’s 660,000 trusts is now unlikely go ahead of the next election on July 1 2013 as had been promised.
Treasury official Graeme Cuxson told the Tax Institute’s national convention there was a case for delaying the start date and the Treasurer would soon announce an amended timetable.
“If - and I note that it is an if - there is a later start date, it will allow for more time for consultations,” he said.
Treasury wanted to stress that trusts were “a legitimate way to arrange financial affairs”.
“Trusts are here to stay,” Mr Cuxson said.
Asked about an attack on the use of trusts by Labor senator Doug Cameron who raised the use of trusts by the "super rich" including the children of mining magnate Gina Rinehart at this week’s caucus meeting, Mr Coxon said whatever changes came out the review would be broadly revenue neutral.
“This is not about wholesale reform, this is not a crackdown"... he said. “It is about easing compliance costs.” The rules governing the taxation of trusts were decades old failing to take explicit account of the introduction of the capital gains tax in 1985.
Treasury's approach would be to “follow the money”, or more accurately to “follow the economic benefit” - taxing the entities that benefited from trusts rather than trusts themselves. It would not be taxing trusts as companies as was recommended by the Ralph review of business taxation in 1999.
It would release a discussion paper on the taxation of fixed trusts in the next few months.
In today's Sydney Morning Herald and Age
. Trusts: Hockey runs for cover
. Trusts: Hockey shows courage