Last week The Tax Institute called on the Federal Government to recommit to the fundamentally important area of trust tax reform, given the recent months of apparent inaction.
As members are only too aware, the ongoing uncertainty around trust taxation is one of the top reform issues and the lack of a clear reform timeline is unacceptable.
The Government had originally committed to release its policy design paper last month. This hasn't happened, so with the reforms obviously requiring more time, the lack of an announced revised timeline is creating greater uncertainty over a complex, cumbersome and critically out-of-date area of the tax system.
In light of Treasury’s resource-constraints, it is disappointing to see the apparent lack of focus on a reform that will assist taxpayers by reducing their compliance burden.
We have called on the Federal Government to end the radio silence on the time schedule for reform and show renewed commitment to this project by immediately releasing a revised timeline. This would provide greater certainty to tax professionals and bring this critical area of taxation into the 21st Century.
The findings in the recent Greenhatch case serve to again remind us of the overly-complex nature of the taxation on trusts. Such decisions have highlighted the ongoing compliance difficulties faced by the 600,000 trusts in Australia, many of which are used by charities, individuals and small to medium businesses. These compliance difficulties often have far-reaching and adverse implications for many Australians, clearly illustrating the urgent need for reform in this area.
Robert Jeremenko is Senior Tax Counsel of The Tax Institute.
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.