The Albanese Government is considering an exemption for discretionary trusts that would allow them to make donations to charities before paying the new 30 per cent tax on distribution income. Source: The Australian.
Religious groups have warned that $3 billion could be lost in donations over five years from 2028 due to the Labor’s proposed tax changes to trusts.
Assistant Minister for Productivity, Competition, Charities and Treasury Andrew Leigh confirmed that the government had modelled the impact of the tax changes on donation levels but said he was not at liberty to disclose that figure.
Dr Leigh said such exemptions for discretionary trusts might not extend to the minimum 30 per cent CGT that a trust would still have to pay, but could allow an exemption from the 30 per cent tax on distributions. Charitable trusts are already carved out by the tax changes.
“There have been issues raised with us around discretionary trusts and distributions to non-profit entities,” Dr Leigh told the National Press Club on Wednesday.
“We’re engaging really constructively with the group of people who’ve raised this issue with us. We’ve engaged with the sector … but what’s not negotiable is we can’t keep the tax system with the unfairness that it currently has baked into it.”
Dr Leigh said the focus was on not-for-profit, non-tax-deductible entities.
A bill for changes to the tax treatment of trusts is yet to be introduced to parliament.
However, Treasurer Jim Chalmers has introduced a bill seeking to remove the 50 per cent capital gains tax discount in favour of an inflation-indexed discount, as well as introduce a minimum 30 per cent CGT, while banning negative gearing for new investors in existing property.
Last week, Liberal senator Dean Smith asked Treasury officials if they had any modelling on the effect of the trusts tax on donations to charities. The officials repeatedly said they were not aware of any analysis.
That bill is being scrutinised by a parliamentary inquiry due to report on June 22.
FULL STORY
Labor Trust tax carve-out for charities under consideration as High Court delivers landmark Bendel ruling (By Matthew Cranston, The Australian)
