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Draft legislation aimed at boosting the tax integrity of trusts could provide a $150 million boost to revenue.
The Assistant Treasurer, Senator Nick Sherry, has released the draft legislation for public consultation. The legislation aims to ensure that individuals who receive income from trusts pay their fair share of tax.
To achieve this, the proposed changes extend tax file number withholding arrangements to closely held trusts, including family trusts.
“Income streams from closely held trusts, by their very nature, can be problematic for the Tax Office to assess — so as a result of these changes, the Tax Office will be able to match the information obtained from trustees with the amounts reported by the trust’s beneficiaries,” said Sherry.
He said this is a Budget measure that targets high-wealth individuals who utilise these types of trusts. It is expected to result in a $150 million boost to revenue over four years, Sherry added.
Trustee beneficiaries where the parent trust is subject to the trustee beneficiary reporting rules will be excluded from the measure, said Sherry, adding that the measures include cutting red tape. The quarterly requirements for trustees to report and remit amounts withheld will be removed, and will be replaced with a simpler annual reporting and remittance.
“These changes will make it easier for trustees to meet their tax obligations while ensuring the measure retains its integrity and targets those who under-report or fail to report their distributions,” he said.
Submissions are open until Friday, February 19.
