The federal government’s review into the taxation of trusts is the most significant attempt at trust tax reform in the last decade, according to the Institute of Chartered Accountants in Australia.
“A review into the taxation of trusts is a courageous and important move by the federal government,” said the Institute’s Tax Counsel, Yasser El-Ansary, following the Assistant Treasurer’s announcement today.
The Institute called for a review into the taxation of trusts in its January 2010 pre-budget submission, and the report into Australia’s Future Tax System made the same recommendation in May 2010.
“The taxation of trusts is a highly complex area of the law, but because there are more than 400,000 trusts across Australia – particularly in the small to medium-sized enterprises market segment – any uncertainty that prevails in this area for extended periods of time can have a widespread and damaging impact on the activities of numerous businesses,” Mr El-Ansary said.
Mr El-Ansary said a major overhaul of the taxation of trusts is necessary in order to restore confidence and provide certainty to millions of Australian taxpayers, their advisers and the Australian Tax Office.
“The process outlined by the government strikes the right balance between addressing immediate priorities, and preparing for longer-term structural reforms aimed at resolving a number of contentious issues which have arisen as a consequence of the High Court’s decision earlier this year in the Bamford case,” he said.