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Australian Trust Uncertainty Exacerbated By Treasury Reshuffle

by Mary Swire, Tax-News.com, Hong Kong

21 December 2001


Tax advisers in Australia have been angered by the continuing uncertainty as to the tax status of trusts, and delays have been made worse by the creation of a new portfolio and a Treasury reshuffle following the recent general election.

Earlier this year, Treasurer Peter Costello shelved plans to tax discretionary trusts as companies, and many Australian taxpayers and their advisers breathed a little easier. However, although the government has warned that trust holders and beneficiaries will still face anti-avoidance measures, no specific details have been given, which has made a lot of people very twitchy.

And to make matters worse, although Senator Helen Coonan has been appointed to the roles of Assistant Treasurer and Minister for Revenue, and Senator Ian Campbell has assumed his new position as Parliamentary Secretary to the Treasurer, responsibility for trusts has not yet been allocated, a factor which is likely to delay the release of crucial information on the tax status of trusts for even longer.

Taxpayers Australia Director, Peter McDonald, has joined the Taxation Institute of Australia in calling for a speedy decision on the subject. 'This is a very unhealthy situation,' he told the Australian media this week. 'We requested that the Tax Commissioner seek clarification from the Treasurer, but the Treasurer won't respond to official bodies. No-one knows what the rules should be.'

However, according to the Chairman of the Board of Taxation, Dick Warburton, negotiations on anti-avoidance measures for trusts have been taking place behind the scenes, and there are plans to release a discussion paper on the subject in summer 2002.


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