Title: Wealthy Australians Are Firmly In Bugets Sights,
Post by imcrookonit on Apr 27th, 2011 at 7:32am
WEALTHY Australians who use their children to minimise tax loom as the targets of a Budget crackdown on family trusts. :)
New tax office figures reveal how high-earners are allocating investment earnings to about 200,000 children, via trusts, to dramatically reduce their own tax bills.
In each case, the amount allocated to under-18s stays just below the tax-free threshold.
The findings pave the way for the Gillard Government to claw back hundreds of millions of dollars in the May 10 Budget. :)
"We've definitely got these sorts of rorts in our sights, especially given they are being exploited predominantly by high-income earners," a source said last night.
"We know a lot of people are doing it tough at the low and middle end of the income range," ;)
The nation's 660,000-odd family trusts are not taxed themselves but individuals receiving money from trusts are taxed at their marginal rate.
Tax office figures highlight the popular practice of placing assets, such as investment properties and shares, into family trusts and distributing "non-work" income to children.
In 2008-9, thanks to manipulation of the tax-free threshold for children, no tax was paid on non-work earnings listed in the names of 192,538 children. Exploitation of the loophole dramatically cuts tax liabilities of thousands of rich individuals - effectively delivering a form of income-splitting not available to regular taxpayers.
Prospects of Budget action come after shadow treasurer Joe Hockey recently flagged taxing trusts in the same way as companies.
Mr Hockey backed down amid anger from Coalition colleagues.
The Government is looking to replenish its finances after the combined effects of summer disasters, a rising dollar and a weaker economy wiped $4.5 billion from expected revenues.
In recent years, the maximum amount of "non-work income" that can be distributed tax-free to children has increased from $1333 to $3333, in line with annual adjustments to the Government's low-income tax offset.
Each increase in the effective tax-free threshold has been accompanied by a near-identical rise in trust distributions to children, but always staying just under the maximum tax-free amount.
The Budget crackdown would contradict previous assertions by Assistant Treasurer Bill Shorten that he did not believe trusts were a form of tax avoidance.
"We see trusts as a legitimate feature of how Australians conduct their financial affairs," he told a tax conference last month.
Comments on this story
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ab of melbourne Posted at 6:36 AM Today
Gee guys, your a bit slow. This should have been done years ago. About thirty or forty years to be precise. Wonder who's nose got put out of joint for it to finally become issue?
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sick of taxes. Posted at 6:23 AM Today
Being a barren atheist Gillard is more likely to follow through with this commitment than John Howard did when he put through an idea to tax family trust accounts and after he won the election it was all gone and forgotten or more likely he opened his own trust account finding that it was more legal than offshore tax avoidance accounts.If the Government was serious about the tax revenue situation everyone without exception would have to pay tax on their gross income before investing their income in shares or trust accounts etc why should the worker be singled out to carry the burden of the Governments revenue collecting.
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kickagoal of lidcombe Posted at 5:12 AM Today
try being white and single in this country taxed into poverty and the families get given every conceivable advatage im sick of being over taxed and getting none of the advantages wheres my tax break what we get is to pay everybody elses bills why does a single person with no children get ripped off i should only have to pay the same tax as anyone single or married with children one person one vote
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