MEDIA RELEASE (AU)

Chartered Accountants Australia and New Zealand (CA ANZ) support the Government’s efforts to address inappropriate income splitting through discretionary trusts but maintains the proposed 30 per cent minimum tax must be carefully redesigned to avoid double taxation and costly restructuring.

While supporting the policy intent, CA ANZ says aspects of the proposal require further work to ensure the measure is targeted and does not create inappropriate outcomes.

CA ANZ Australian Tax Leader, Susan Franks, said the policy objective can be achieved without penalising businesses that use trusts for genuine reasons.

“The question is not whether inappropriate income splitting should be addressed. The real question is whether the proposed design achieves that objective in a fair, practical and economically sensible way,” Ms Franks said.

“Double taxation is a deal breaker. If the rules tax the same income twice, businesses will be pushed into restructuring not because their commercial arrangements are inappropriate, but because the tax law has made them unviable.”

“Trusts play an important role in many family-owned businesses. They are not just used for tax purposes. Any reform should be carefully targeted, so it addresses misuse without creating inappropriate consequences for ordinary businesses,” Ms Franks said.

CA ANZ believes any reform should be part of a broader effort to simplify trust taxation, which remains overly complex and uncertain for businesses, taxpayers and advisers.

“Trust taxation is already held together by layers of rules and court decisions," Ms Franks said.

"The answer is not to add another layer that creates double taxation and compels businesses to restructure. The answer is to modernise the framework, so it is clear, targeted and administrable."

CA ANZ is calling for further consultation and the release of draft legislation before the measure proceeds, given the complexity of trust taxation and the potential impact on private businesses and the broader economy.