What does the ATO think about Labor trust reform?

What does the ATO think about Labor trust reform?  Well, it looks like Labor’s proposal to tax trust may be just that – a proposal.

The Age on Friday 25th August reported the ATO’s Deputy Commissioner of Taxation Mr Chris Jordan speech to the Vodafone National Small Business Summit.

The Age reported that Chris Jordan said “There’s a whole lot of reasons to pass through capital gains tax discounts and to be able to have discretion as to income and protect assets. It’s hard one.  It is a real difficult nut that one.  I think there have been a few goes at it over the decades.” 

I hear three things in these comments:-

  1. It’s difficult to address (and doing so may have unfair consequences).
  2. Income splitting is fair and reasonable (and in any case can be achieved through an array of means other than trusts).
  3. And perhaps most importantly, asset protection is a driving reason as to why people elect to use a trust structure.

Mr Jordan also went on to say that “Many small businesses and farmers were using complex arrangements they didn’t understand.”   This has certainly been our experience.  I could write an essay on this topic but simply say that most clients need help to understand trust structures and thereby put in place effective wills.

At MRS, we will spend today planning for your success tomorrow.

 

At MRS, we will spend today planning for your success.