The Labor Party has announced new tax reforms to create a system that is fairer for all Australians.
A Shorten Labor Government will introduce a standard minimum 30 per cent tax rate for discretionary trust distributions to mature beneficiaries (people over the age of 18). Labor’s policy will tackle the use of income splitting to minimise tax – making the tax system fairer and improving the budget bottom line.
Federal Member for Blair Shayne Neumann MP said that these reforms were essential for evening the playing field and ensuring wealthy Australians weren’t able to skip out on their tax obligations.
“While many Australians use trusts for completely legitimate purposes, in too many cases they’re used solely for tax minimisation.
“Labor’s policy will close up loopholes like artificial income splitting which allow some to avoid paying the tax they should.
“While this isn’t illegal, it isn’t fair, and is something that ordinary working Australians simply aren’t able to do.
“Under Labor’s policy, individuals and businesses will still be able to use discretionary trusts.
“However, the new minimum 30 per cent tax rate on distributions will make sure discretionary trusts cannot be used as a vehicle for aggressive tax minimisation.
“Labor’s policy will not apply to non-discretionary trusts, farm trusts and charitable trusts.
“These reforms are about making sure trusts serve their true purpose instead of being used so that wealthy Australians can avoid paying tax.”
Mr Neumann said that the proposal built on Labor’s plans to overhaul the tax system so that ordinary Australians aren’t disadvantaged.
“Our plan to crack down on tax minimisation through trusts comes in addition to previously announced reforms including superannuation reform, negative gearing and capital gains tax – issues that have been ignored for too long to the cost of ordinary workers.
“These policies are all about making sure that hard working Australians aren’t being left behind by a system that can unfairly favour the wealthy.
“Labor is of the firm belief that there should be one tax system in Australia – one that is fair for everyone.”