National accounting firm Chan & Naylor has gone on the defensive regarding what it describes as “reckless and irresponsible attacks” on trust structures from Treasury.
Treasury’s plan to crack down on families using trusts is simply “sport against people who use trusts to manage their estate planning, asset protection and business enterprises,” the firm stated.
Australians who have accumulated legitimate wealth will be caused uncertainty and distress due to the characterisation of trusts as an avenue for tax avoidance, according to Chan & Naylor.
The vast majority of taxpayers are using trusts legitimately and the anti-avoidance provisions of Part IV A of the Tax Act would capture any abuse of the system, the firm stated.
“The real issue is the complexity of the tax legislation and its ever-changing interpretation,” said Chan & Naylor director Ken Raiss.
“The fact the adult tax free threshold after the low tax offset ($15,000) is significantly above the child’s rate ($3,333) who incidentally pay tax on unearned income at between 66.5 per cent and 46.5 per cent has nothing to do with trusts,” he said.
“The same rules apply to any structure whether setting up a bank account for the benefit of a child in their name or buying shares in the child name,” he said.
The Government should focus on educating people on the tax system rather than punishing those who are using the system fairly, Raiss said.
