Publication date: 27 Nov 00 |
Source: THE TAX INSTITUTE
The Taxation Institute of Australia has given a cautious welcome to the Commissioner of Taxation's announcement of new arrangements for Ultimate Beneficiary Statements which are aimed at relieving trustees of 'closely held trusts' from the current onerous, inequitable and ill-conceived reporting obligations.
In a press release issued yesterday, the Commissioner stated that trustees will not need to lodge another Ultimate Beneficiary Statement providing they have lodged a 1998-1999 year UB Statement and they do not have a UB non-disclosure tax liability.
"On the surface, this concession by the Commissioner looks like a win for the 55,000 trustees facing a combined annual bill of around $40 million to comply with the legislation," said Mr Ray Conwell, President of the Taxation Institute of Australia.
"However, satisfying the condition that no UB non-disclosure tax liability exists may involve the same onerous compliance obligations as lodging the UB Statement. This is because ascertaining whether or not a UB non-disclosure tax liability exists will still require a trustee to gather all of the information required to submit a UB Statement," he said.
"Moreover, in those instances where it is impossible to obtain the relevant information, eg, because the trust beneficiary is a tax exempt body such as a Church, a liability for UB tax will technically exist. Unless the Tax Office is prepared to overlook these situations, the purported relief is no relief at all," he said.
The Taxation Institute has been lobbying the Government for a long period of time to provide some real clarity in the area of Ultimate Beneficiary Statements. The Institute believes that, although the original purpose of the legislation was to catch out the few wealthy tax cheats, the effect of this bad tax policy and poorly drafted legislation has been to tie up many innocent taxpayers in a mountain of unnecessary paperwork and compliance costs.
"It is crucial that the Commissioner provide additional information on how the Tax Office will administer these new arrangements and outline what trustees will have to do and what records trusts will have to retain in order to prove they meet the Commissioner's conditions. Otherwise, it is a Claytons' solution," said Ray Conwell.