Australian Politics Forum - Really? I have to start the budget discussion?

Dnarever

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Re: Really? I have to start the budget discussion?
Reply #75 - Today at 9:51am

Quote:

Exemptions: The minimum tax does not apply to fixed trusts, widely held trusts, complying superannuation funds, charitable trusts,

special disability trusts

, or

complying deceased estates.

Furthermore,

existing fixed testamentary trusts are also exempt from this measure.

.
Quote:

Transitional Relief: To assist small businesses and others wishing to restructure out of discretionary trusts, the government is providing expanded rollover relief for a three-year period beginning 1 July 2027

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Quote:

Labor’s proposed 30 per cent tax on discretionary trusts will not be among the first tranche of budget bills introduced in the next sitting week, Anthony Albanese says amid backlash over the levy.

The tax would apply a minimum 30 per cent rate on the trusts in a bid to stop rich Australians using them to reduce their taxable income and assets on paper.

But the Prime Minister said on Tuesday the trust tax legislation would “take longer to develop” than other budget measures in a sign it could be rethought.

.

Under current rules, a high-earning individual could channel their business or investment profits through a trust and distribute it to family members with no or little incomes, such as adult children or a stay-at-home spouse.

But Australians leaving money for their families after they die could also be captured by the new tax, prompting the Coalition to decry it a “death tax”.

Quote:

Discretionary testamentary trusts are set up in a will and are not taxed when at death but when they are disbursed. The reforms would change that by applying the minimum rate on a trust’s taxable income before distributing it.

Both Mr Albanese and Treasurer Jim Chalmers have rejected the claim that the proposed rate would amount to a death tax, which Australia abolished almost 50 years ago.

https://www.news.com.au/finance/money/tax/anthony-albanese-delays-controversial-...

Seems that Labor may be looking at how to fix the faulty part of this.

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Dnarever

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Re: Really? I have to start the budget discussion?
Reply #76 - Today at 10:07am

Bobby. wrote Today at 9:25am:

I never heard of a testamentary trust until a few days ago. Embarrassed

Could I have beaten the tax man? Undecided

Yes - If you are both wealthy and dead (just joking). No this is less than 1% of trusts.

How this works is if you say put $2M into this type of trust funded by a death in this case. You can distribute that money at say $18K per year tax free. Because that $18.2K it the lower limit for tax and this falls under the tax starting limit there is no tax on the person who recieves the trust. It also means that anything they earn on top is taxed straight away. What the chage does is to tax at 30% any profit made on the lump sum to be paid by the Trustee. (only the interest is taxed).

How this works:

Example: You have 4 children peing paid by the trust and a non working wife. The trust pays them $25k each.

18,200 is the current min tax threshold. That means that each recipiant would pay about $1,088 in tax.

That is income total for all 5 people = $125,000.00
Total tax for all 5 people = $5440.00

Not a bad deal I can see why a labor gov would want to end that and why a Lib Gov wouldn't.

Yes Bobby you can do this if you have a spare $1,500,000 dollars or so laying around doing nothing but avoiding taxes.

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« Last Edit: Today at 10:18am by Dnarever »

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Dnarever Gold Member Offline Australian Politics Posts: 61678 Here Gender:	Re: Really? I have to start the budget discussion? Reply #77 - Today at 10:21am Bobby. wrote Today at 9:25am: I never heard of a testamentary trust until a few days ago. I suspect that nobody has much outside the 1% of trust users who have one and their slimy advisers have.
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Frank

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Re: Really? I have to start the budget discussion?
Reply #78 - Today at 11:47am

Dnarever wrote Today at 10:07am:

Bobby. wrote Today at 9:25am:

I never heard of a testamentary trust until a few days ago. Embarrassed

Could I have beaten the tax man? Undecided

Yes - If you are both wealthy and dead (just joking). No this is less than 1% of trusts.

How this works is if you say put $2M into this type of trust funded by a death in this case. You can distribute that money at say $18K per year tax free. Because that $18.2K it the lower limit for tax and this falls under the tax starting limit there is no tax on the person who recieves the trust. It also means that anything they earn on top is taxed straight away. What the chage does is to tax at 30% any profit made on the lump sum to be paid by the Trustee. (only the interest is taxed).

How this works:

Example: You have 4 children peing paid by the trust and a non working wife. The trust pays them $25k each.

18,200 is the current min tax threshold. That means that each recipiant would pay about $1,088 in tax.

That is income total for all 5 people = $125,000.00
Total tax for all 5 people = $5440.00

Not a bad deal I can see why a labor gov would want to end that and why a Lib Gov wouldn't.

Yes Bobby you can do this if you have a spare $1,500,000 dollars or so laying around doing nothing but avoiding taxes.

It is 5 different people. Why would you treat them as a single recipient when you cannot similarly pool your income while you are alive and have $18k treated as tax free for every member of your household?

Avoiding to pay tax you do not have to is common sense. Not the same as tax evasion of tax you are required by law to pay.

As Packer explained, governments are not spending our money so well that we want to give them extra.

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Estragon: I can’t go on like this.
Vladimir: That’s what you think.

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lee Gold Member Online Australian Politics Posts: 20764 Gender:	Re: Really? I have to start the budget discussion? Reply #79 - Today at 1:10pm Dnarever wrote Today at 9:13am: Likely over 95% of people using these trust and not minors they are just people trying to avoid taxation. So if a testamentary trust is taxed at adult rates, how do they avoid taxation?
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lee Gold Member Online Australian Politics Posts: 20764 Gender:	Re: Really? I have to start the budget discussion? Reply #80 - Today at 1:12pm Dnarever wrote Today at 9:35am: Well AI is wrong or would be if it really said that - it doesn't. Then perhaps you can show, through AI, that they have "always" been taxed?
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lee

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Re: Really? I have to start the budget discussion?
Reply #81 - Today at 1:20pm

Dnarever wrote Today at 10:07am:

18,200 is the current min tax threshold. That means that each recipiant would pay about $1,088 in tax.

That is income total for all 5 people = $125,000.00
Total tax for all 5 people = $5440.00

Now then ... that would certainly apply, but it is a family trust not a testamentary trust. And it means that the money belongs to the recipients, not to the trustee who distributes it. That mean the beneficiaries would be able to sue to recover their money, if it was withheld. So these people would gladly live on $25k a year? Grin

Dnarever wrote Today at 10:21am:

I suspect that nobody has much outside the 1% of trust users who have one and their slimy advisers have.

Ah you suspect. It shows the level of your knowledge. Wink

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