Small businesses warn of restructuring costs from trust tax plan

Summarised from 2 outlets · Updated 4 Nov, 18:21 · Archive

Australia's government proposes a 30 per cent minimum tax on trusts; small business advocates urge exemptions for firms earning under $10 million.

Australia's federal government has proposed introducing a 30 per cent minimum tax on trusts. Labor introduced the plan in the May budget, arguing that discretionary trusts have been used to subvert the tax system and shift the burden onto workers. An inquiry into the proposal is being held on Thursday.

The Council of Small Business Organisations Australia has warned the changes will harm small businesses using trusts for genuine purposes such as asset protection. In a submission to the two-day inquiry, the council called for businesses with annual turnover under $10 million to be exempted from the changes. Chief executive Skye Cappuccio said the proposal treats 'a legal structure - one that hundreds of thousands of small businesses use for genuine purposes - as a problem' and will 'materially increase the tax paid by genuine, family-operated small businesses that use discretionary trusts for asset protection'.

The council said affected businesses would face three options: accept a higher tax bill, undertake costly restructuring, or elect a fixed beneficiary for distributions. Cappuccio warned that small businesses would be severely penalised if circumstances changed after making such a choice. The council also recommended that restructuring costs be made tax deductible.

How it is being reported

• Fears new trust tax changes will smash small businessesAdvocates have urged for existing small businesses earning less than $10 million a year to be carved out from increases to taxes on trusts.Perth Now · 4 Nov, 18:01
• Fears new trust tax changes will smash small businessesAdvocates have urged for existing small businesses earning less than $10 million a year to be carved out from increases to taxes on trusts.The West Australian · 4 Nov, 18:01

In this story: Australian government · Labor · Council of Small Business Organisations Australia · Skye Cappuccio

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