Publication date: 06 Feb 00 |
Source: THE TAX INSTITUTE
"Disappointment yet elation, frustration yet relief, were the mixed reactions to the government announcement on changes to closely held trusts," said Taxation Institute of Australia President, Gordon Cooper.
"The changes to the Ultimate Beneficiary Statements (UBS), announced late Friday, have provided limited relief to small business and tax practitioners, but millions of innocent taxpayers remain caught in the mountain of paperwork needed to comply with this legislation, which was designed to catch major tax cheats," he said.
The Taxation Institute of Australia and other professional bodies have been urging the Government to amend the legislation for over eight months since it was rushed through in five weeks during the GST food debate.
"Our efforts have removed some of the 'nasties' from this legislation," Mr Cooper said. "But the paper work mountain still exists, and the threat of penalty tax impacting on the innocent taxpayer remains."
"This ill-conceived and poorly designed law aimed at a small number of high wealth individuals with complex circular trust schemes, ended up nailing thousands of innocent small businesses with harsh penalties and large paperwork costs," he said. "A simple transposition of a numeral in a tax file number leads to them being taxed at the top rate."
"The law still can result in trustees paying the top marginal tax rate even though the income is included in a beneficiary's tax return," he said. "But at least now the trustee can sue, although this process itself is expensive and longwinded."
"It's a good first step but more are needed," Mr Cooper said. "The Taxation Institute continues to urge the government to reconsider further changes to exempt thousands of innocent businesses from these oppressive measures and quarry away the paperwork mountain."