Federal Labor's new 30 per cent tax on distributions from family trusts

On 30 July 2017, Federal Opposition Leader, the Hon Bill Shorten MP, announced that he wants to impose a 30% tax rate on distributions from family trusts to make the tax system fairer. It would target high-income earners who use trusts to split money to other family members in lower tax brackets, which cuts their tax bill.

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Mr Shorten conceded that 200,000 of the 315,000 trusts that would be affected belonged to families running small businesses. "They'll be a portion of it, we suspect around 200,000 of about three million small businesses. I do think that qualifies as a small number," Mr Shorten told ABC News 24. The Federal Labor Opposition also said trust arrangements used by farms, charities and deceased estates would be exempt.

Federal Labor's policy allows for the Australian Taxation Office (ATO) Commissioner to be given discretionary powers to manage exemptions, with the ATO also being handed an extra $55 million to boost existing trust anti-avoidance activities.

Mr Shorten said the policy had been costed by the independent Parliamentary Budget Office to raise an estimated $4.1 billion over 2021-22, with another $17.2 billion reaped over 10 years.

The Australian Childcare Alliance NSW is seeking the full details and clarification from the Australian Labor Party regarding their new proposal.

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