While Labor’s Retiree tax and changes to negative gearing and capital gains tax have been in the spotlight, there’s another big unfair tax grab that is not as well known or understood – changes to the tax treatment of family business trusts.
From the Sydney Morning Herald:
“Small businesses remain confused about the impact of Labor's policy on family trusts as the election looms.
Labor has pledged to introduce a standard minimum 30 per cent tax rate from 1 July 2019 for discretionary/family trust distributions.
Head of the Council of Small Business of Australia, Peter Strong, says most small businesses are unaware of the policy.
"I think it is below the radar but it will have quite a big impact," he says. "It discriminates against people who are running a business and who are investing in that business. The policy is misdirected, the policy is saying 'If you run a trust you are doing it because you want to unfairly minimise your income'. You don't maximise your tax you minimise it."
Family trusts are a common investment vehicle for small business owners with an MYOB survey of more than 1,000 business owners released this week finding 29 per cent of business owners have established a trust either for family or business purposes.”
Labor’s tax grab on family business trusts is expected to raise $1 billion every year over 4 years.
“This is just another tax grab by Labor that will hurt businesses and damage the economy. It’s dressed up in Labor’s typical class warfare rhetoric, portraying these trusts as the preserve of the very wealthy. That’s not the case at all,” National Director of Advance Australia Gerard Benedet said.
“Most family business trusts are set up by small businesses to protect their assets and help them grow the business. That means more jobs. The vast majority of family business trusts are Mums and Dads who are taking a risk to set up a small business and grow it to employ others.”
Mr Benedet said it was concerning that MYOB Research had found a high level of confusion about Labor’s tax changes – with 33% of those affected believing it would actually benefit them.
“There is no benefit to anyone from this tax grab. Except, of course, Labor – they get an extra $1 billion each year to waste on their big spending schemes. These changes rip $1 billion a year from family businesses – it’s another unfair drag on our economy that will cost jobs.”
As Peter Strong, Head of the Council of Small Business of Australia, said recently:
“If we unfairly tax small businesses who have discretionary trusts, we are actually putting jobs and families at risk. Why would a family take a risk, run a business, and employ people if there is less return for effort? Family is family. The whole family counts otherwise it’s not a family business.”