Expert says trust use to avoid tax 'bordering on a joke'
Small business advocates say it is a misconception that trusts are only used by wealthy families to minimise tax, but one expert says the current system is "bordering on a joke" and in urgent need of reform.
Small business advocates argue that a proposed 30% minimum tax on discretionary trusts is an unfair burden on tradies, labeling the reform "bordering on a joke." Discretionary trusts are currently being misused to offset tax bills, according to Associate Professor Dale Boccabella from the University of New South Wales. The reforms would take effect in July 2028, affecting less than 10% of small businesses, though the cost of consulting legal and accounting professionals to assess potential impacts could range from $10,000 to $25,000.
The Treasurer, Jim Chalmers, suggested that the majority of businesses would not need to pay the new tax, but Housing Industry Association managing director Jocelyn Martin emphasized the additional costs involved. About one in six small businesses use discretionary trusts, with the number of such trusts doubling since 2001-02. The Treasurer acknowledged that the reforms would impact a small proportion of businesses but stressed that the changes would still affect a significant number.
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