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Tax professionals perplexed by Treasurer's stand on trusts

Publication date: 10 Dec 97 | Source: THE TAX INSTITUTE

Tax professionals perplexed by Treasurer's stand on trusts

Comments by Federal Treasurer Peter Costello regarding the taxation of trusts reflect an uncritical acceptance of tax office propaganda and are seriously skewing the debate on the treatment of these legitimate business structures, according to Taxation Institute of Australia President, Mr Richard Gelski.

The tax profession remains perplexed at the continued attack on trusts, a vehicle which is the most common alternative to a company for small to medium businesses," Mr Gelski said.

"We can't understand, given the cogent arguments put forward by tax professionals that the advisers to the Treasurer can still be missing the point."

"Focussing the argument on the insinuation that beneficiaries of trusts are unfairly advantaged under the current tax regime distracts attention from a much more important reform issue that shareholders in companies are the ones who are being disadvantaged."

"Failure to approach the matter in an even handed and fair manner has distorted the debate," he said.

Mr Gelski went on to state that moves by the Government to restrict access to legitimate tax free benefits of trusts was unfair.

"The Government has already specifically recognised the legitimacy of trusts by enabling them to have access to tax concessions such as goodwill exemptions. It is unfair to deprive trusts of these benefits solely because they are trusts," Mr Gelski said.

"The Treasurer's implication that trusts are established by high net wealth individuals, or anyone else, solely with sinister motives of tax avoidance is wrong."

"Where is the proof?" Mr Gelski asked.

"I challenge the Treasurer to call on the Tax Office to tell us how much of the expected $800 million per annum has been collected from the so-called 'rich list'. Bald statements that tax free benefits have been passed through to trusts which have been investigated are of assistance to no one. Such benefits might be entirely legitimate," he said.