Property investors using family trusts may not be able to allocate income to their children after the next Budget.
According to a report in the Australian, Treasurer Wayne Swan hinted that he may be intending to tighten the rules surrounding family trusts - particularly in relation to the allocation of income to children.
Swan suggested the move would be intended to prevent the use of such trusts to reduce the tax bills of high earners.
"What I always will judge these issues by is what is best for lower and middle income earning Australian families," said the Treasurer. "If others are using artificial means to avoid their tax, then we should do something about that."
Ken Raiss, director of accountants Chan & Naylor, took a dim view of Swan's suggestion.
"The government seems to be focused on a taxpayer being able to distribute income to lower taxpayers - i.e. their children - when the real issue is the complexity of the tax legislation and its ever changing interpretation," said Raiss.
“It seems that attacking trusts as a legitimate structure which have been around for hundreds of years is the sport of the day. At the end of the day, taxpayers are entitled to use the system."
Raiss added that taxpayers already need to take care that they are not carrying out any such allocations just for tax benefits, as "the anti-avoidance provisions of the Tax Act would mean they are taxed anyway".
Is the Treasurer's suggestion an unfair attack on hard-working Aussies, or should reform of trusts go further? Discuss the issue at www.yourinvestmentpropertymag.com.au/forum
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