THE Government’s proposed changes to trusts unfairly discriminate against small business, according to CPA Australia.
In a submission to the Federal Treasurer, the CPAs opposed the proposal calling for a fundamental policy rethink.
The Unified Entity Regime Exposure Draft (ED) recommends taxing non-fixed trusts at the entity level.
“The draft is grossly disadvant-ageous to small business, who are the predominant users of non-fixed trusts – although it is not just a small business issue,” said senior tax counsel Paul Drum.
“The proposal creates an uneven playing field and ‘gongs’ non-fixed trusts, with entities other than non-fixed trusts the winners.”
Mr Drum said the lack of fundamental details and definitions, such as the ED’s current definition of non-fixed trusts, meant every trust could be defined as non-fixed.
“To protect their interests every trust will need to have their deeds reviewed before July 1,” he said.
More than 450,000 of the total 453,639 trusts in Australia are effectively in the small/medium (SME) category. Businesses operating through a trust structure span almost the full breadth of industries, ranging from primary production, finance, retail and manufacturing, to health, comm-unity services and others.
The CPAs argue that taxing trusts is the most significant issue for business of all the proposed business taxation reforms because trusts are the preferred business vehicles for SMEs instead of companies or partnerships.
