Accountant wants to see trust tax changes ‘thrown in the bin’

Two Sides Accounting founder and director Natalie Lennon said that while she understood that the intention behind the discretionary trust tax reforms is to level the playing field and prevent some businesses from being able to organise their tax affairs in a certain way, the draft legislation paints all businesses with the same brush regardless of their circumstances.

“The government could have done this in other ways. They could have applied the rules to businesses whose distribution trust income is over a certain amount,” Lennon said.

“Instead, they’ve put this blanket rule on everybody without having a look at the data or undertaking much consultation.”

Lennon also criticised the government for rushing the legislation through without considering the implications, and then releasing tranches and carve-outs. She accused the government of “gaslighting” businesses by offering the option of restructuring into a fixed trust.

“If we wanted to do that, we would have done it to start with,” she said.

“Now, they’re talking about stamp duty and other implications that could arise from restructuring. All these carve-outs are being announced because the government didn’t think it through. You come out with a big piece of legislation and then realise you didn’t do some of it properly, and then you announce multiple changes.

“It’s just ridiculous. Why not wait until you get it right before rolling it out? I’d love to see the trust tax reforms thrown in the bin. I’d like to see an early election called and the whole thing thrown in the bin. I’m not happy with any of it.”

Accountants are “at their wit’s end”, Lennon remarked, as they manage a number of changes simultaneously such as Payday Super and new anti-money laundering laws, on top of the tax reform changes.

“I’m mentoring accountants who are questioning whether they want to continue being an accountant because it’s just too hard,” Lennon said even as studies revealed that the profession could face a severe shortage of accountants and auditors in the next decade.

Calling tax accountant the great winner ‘infuriating’

When treasurer Jim Chalmers introduced the legislation for the minimum 30 per cent tax on discretionary trusts to Parliament, shadow assistant treasurer Kevin Hogan said the “great winner” of these tax reforms would be the tax accountant as compliance costs and the cost of obtaining advice from accountants could “go through the roof”.

Lennon rebuffed Hogan’s stance, arguing that some accountants may have to offer their services at discounted rates because many businesses are struggling and would not be able to afford paying additional compliance costs.

“It’d be nice if we could charge more and if people could actually pay it, but it’s actually the reverse,” she said.

“It infuriated me when Kevin Hogan made those comments.”

Lennon bemoaned the lack of consultation on these major tax reforms, along with the lack of communication on when the legislation would pass Parliament, and said accountants are left in limbo about the timelines.

“We as accountants are wondering if we are going to have enough time to discuss strategies with our clients,” Lennon said.

“They’ve introduced some legislation to Parliament, but do we know when it’s potentially going to become law? Is it going to pop up in May and give our clients just a month to make decisions on whether they have to restructure?”

The NSW and Western Australian governments have said that trusts choosing to become an excluded election trust (EET) will not pay stamp duty on that choice, but in NSW this would only be conditional on the government being re-elected. However, the stamp duty consequences for trusts that restructure are still not clear.

The Victorian Labor government recently said that upon re-election, it will “give Victorian businesses a three-year stamp duty moratorium to provide certainty”.