The $2.9 trillion corner of Australia's economy at the centre of a tax war
The government plans to close a tax advantage many workers can't access by imposing a minimum 30 per cent tax on the net income of 840,000 trusts that allow wealthy investors and family businesses to spread income across their family or obscure asset ownership in bankruptcy and family-court proceedings. Australian trusts have combined assets of $2.9 trillion with annual income of $600 billion.
The changes are projected to raise $4.47 billion in 2029/30 after they begin on 1 July 2028. Treasury data shows trusts are overwhelmingly used by Australia's top 10 per cent of income earners who receive about two-thirds of distributions, while the bottom 10 per cent receive one per cent.
https://www.sbs.com.au/news/article/tax-loophole-or-essential-business-structure/xn0sec0ysOpen linkView original on leminal.space
4 replies
Good news.
I don't care what combination it is, but we need both direct progressive taxation and closing of wealth-hiding loopholes. Leave the ultra wealthy nowhere to hide.
I must be missing something major because the numbers don't make sense to me. They are going to impose a minimum 30% tax on a bunch of trusts. Trusts are making $600 billion a year. But they only expect to make ~$4.5 billion in taxes per year? 30% of $600 billion is $180 billion. Why wouldn't they be making far more with this tax? Does it target only the small trusts? Seems like a lot of the profit of these trusts is just being ignored for some reason.
Possibly the average tax rate across large and small trusts currently is like 25 percent - that way forcing a minimum of 30 percent only nets a relatively small increase.
5% is still $30 billion. Hell, 1% would still be $6 billion.