Publication date: 24 Feb 98 |
Source: THE TAX INSTITUTE
The sustained attack on trusts by the Treasurer and the Australian Taxation
Office is unjustified and will not help solve the larger problem of tax evasion in
this country, according to Taxation Institute of Australia President, Mr Richard
"To suggest that trusts, in particular discretionary trusts have become a vehicle
for 'widespread tax evasion' is patent nonsense," Mr Gelski said.
"Tax evasion occurs at the basic level of non-disclosure which is reflected in
the black economy. The smoke screen that has been so admirably put in place
by the Tax Office, and which has obviously influenced the Treasurer, is just
that....a smoke screen," he said.
The Treasurer announced this week that the Government will review the
taxation of trusts as part of its tax reform package rather than releasing a
separate public discussion paper as promised in the 1997 Budget. The Taxation
Institute is concerned that the review of trusts will now not be subject to public
scrutiny by taxation professionals, but be conducted behind the closed doors of
"If this Government truly intends to obliterate the family's use of trusts as a
vehicle through which people may do business or hold assets, then it should
conduct a full scale review of the grossly unfair treatment of company
distributions to shareholders," Mr Gelski said.
"On the one hand, the Government provides for exemptions such as on the sale
of goodwill in a business or, alternatively, exemptions in respect of the
indexation component of profits on the sale of assets within the capital gains tax
net, and on the other, it takes them away when they are passed through to
shareholders in a company."
"The approach by the Tax Office, which seems to be blindly followed by
Treasury, puts taxpayers into straight-jackets and forces them into unlimited
liability as sole traders and partners in partnerships if they wish to take
advantage of the 'goodies' such as those described above," Mr Gelski said.