04 Sep 08 Family Trust Election amendments defeated in the SenateOn 3 September 2008, the Senate passed Tax Laws Amendment (2008 Measures No 4) Bill 2008 with amendments.
The amendments, proposed by the Opposition, deleted Schedule 2 to the Bill. Schedule 2 contained the proposed changes to the family trust election provisions announced by the Government in the lead up to the last Federal election. These changes involved a change to the definition of "family" and removed the ability for family trusts to make a one-off variation to the test individual specified in a family trust election (other than specifically in relation to the 2007-08 income year or a marriage breakdown).
The defeat of these proposed changes in the Senate is welcomed by the Taxation Institute, which made a strong submission to this effect to the Senate Standing Committee on Economics, both in person before the Committee and in writing: see 2008 TAXVINE No32 (2) and (13) (15 August 2008). Part of the Taxation Institute's written submission was quoted in debate in the Senate by Senator Bushby (Tasmania) as follows:
"As already apparent, the proposed changes also fly directly in the face of the strongest advice from all the relevant professional organisations, as contained in their written submissions and as presented at the hearing. For example, the Taxation Institute of Australia stated in their written submission to the inquiry:
'As the 2007 amendments were specifically targeted to overcome a number of acknowledged problems with the operation of the FTE rules and reduce the onerous associated compliance costs, we continue to struggle with the need to reverse these amendments. Not only will this rollback impact unfairly on taxpayers, it is also difficult to see how the amendments will result in any significant revenue savings.'"
The Bill (as amended) now returns to the House of Representatives, for consideration of the Senate's amendments.
For a copy of the Senate debate in Hansard (pp 1-13), go here