Publication date: 12 Sep 97 |
Source: THE TAX INSTITUTE
Calls from the Tax Commissioner, Mr Michael Carmody for trusts to be taxed as companies shows just how dangerously out of touch the Australian Tax Office is with commercial reality, according to Taxation Institute President, Mr Richard Gelski.
Speaking at the Taxation Institute of Australia's State Convention in Tasmania, Institute President, Mr Richard Gelski said that the Tax Commissioner was trying to paint trusts as vehicles of tax avoidance and automatically linking trusts to high net wealth individuals.
"It is grossly unfair of the Commissioner to imply that trusts are established by high net wealth individuals, or anyone else, solely with sinister motives of tax avoidance," Mr Gelski said.
"In fact, the moves announced by the Commissioner in Adelaide on Wednesday will hit small businesses more than wealthy individuals."
In his speech, the Commissioner expressed the view that it was appalling that a discretionary trust should be able to distribute building allowances and accelerated depreciation without beneficiaries being subject to tax while companies cannot do likewise (such distributions from a company would be fully taxed - without franking credits).
"I agree wholeheartedly with the Commissioner," Mr Gelski said. "What could have possessed the policy makers when they created a system where discretionary trusts are treated in the same way as individuals would be treated?"
"On the other hand, perhaps all trusts, not just discretionary trusts and even (heaven-forbid) companies, should be treated in the same way as discretionary trusts and individuals."
"Have you ever thought, Mr Commissioner, that that might be more fair? After all, these allowances were designed to give taxpayers a 'tax-break' - at least that's what the policy makers thought at the time," he said.