Publication date: 27 May 08 |
Source: THE TAX INSTITUTE
Retrospective tax legislation to be introduced following the recent Federal Budget could expose 400,000 Australians with family trust to harsh tax penalties.
Australia’s premier professional tax body, the Taxation Institute of Australia, today called on the Government to immediately reverse its decision to introduce retrospective legislation relating to Family Trust Elections (FTE).
“This is of great concern to the Taxation Institute and its Members, particularly given that Governments traditionally endorsed the rule of law as being fundamental to our democracy,” Ms Williamson said.
“We believe that any attempt to reverse a law of the parliament retrospectively should only be taken in extreme circumstances and we cannot accept that a minor revenue gain, if there is any, is extreme enough to justify such a fundamental breach of the rule of law.”
Ms Williamson said that the introduction of this retrospective law also went against the Government’s initial commitment that it would discontinue the Family Trust Election amendments that were introduced in 2007 from 1 July 2008.
“Only in the interest of public policy - such as addressing tax avoidance - should a Government introduce retrospective legislation,” Ms Williamson said.
“There has been no suggestion that there has been any tax avoidance in these circumstances, therefore, we cannot understand why they have undertaken such measure and we certainly hope that it is not a sign of things to come.
“We are particularly disappointed with this, as tax professionals have been advising their clients to the letter of the law as it stood. Now we find that this advice may be superseded.
Ms Williamson said since the Government announced these potential changes in their election platform, the Taxation Institute has been actively advocating for the Government to rethink its decision in this area.
“The changes are hard to fathom as they are reversing measures that were introduced to allow for a more simple, less complex law in this area,” Ms Williamson said.
“Unfortunately at the same time, the Government has added further uncertainty and complication to the tax system through this retrospective amendment.
“The Government must immediately clarify its position or rein back the retrospective nature of the FTE’s so that taxpayers are not being slugged for acting in accordance with existing laws.”
Media Contact: Dr Michael Dirkis, Taxation Institute of Australia on 0417 400 349
Peter Laidlaw, Lighthouse Communications Group on 0419 210 306