"We welcome the Treasurer's announcement today on trusts that has circumvented some of the unnecessary compliance and taxation pain for business that would have been inflicted on up to half a million small and medium sized businesses," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.
"The draft legislation is a vast improvement on what was first proposed nearly four months ago in the 12 May Budget.
"The anguish this has caused could have been avoided if the Government had properly consulted beforehand to avoid the perverse outcomes they had initially created.
"We appreciate the Treasurer has considered our advocacy and taken on the recommendations we have made on the Budget proposal.
"There were three main problems with the design and the Treasurer has today alleviated the most pressing of industry's concerns. The outstanding issue for businesses will be the compliance burden to restructure legal arrangements.
"The Government's new proposal avoids the threat of state-imposed stamp duties on businesses genuinely complying with federal tax law. This decision is of particular importance to family sized businesses that operate under a legitimate trust arrangement.
"Our submission on the proposal recommended:
- Flexibility should be achieved by extending rollover relief to all entities transitioning out of a discretionary trust structure, with no limitation on the kind of company or partnership structures which are adopted.
- Transition rules should be kept simple via the use of existing tax administration concepts to ensure administrative complexity and transaction costs are minimised.
- The Commonwealth should engage with state and territory counterparts to secure corresponding relief from state-level transfer duties for entities which utilise rollover relief arrangements.
"We thank the Treasurer for his careful consideration of this matter and willingness to contructively respond to industry representations," Mr Willox said.
