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Shorten Details Australian Tax Simplification Plans

Monday, March 7, 2011

Australia’s Assistant Treasurer Bill Shorten took the opportunity to promote the success of the Gillard Government’s tax policies including simplification, in a speech to the Taxation Institute of Australia in Brisbane last week. He also used the occasion to slam the opposition’s tax reform ideas as 'petty and cynical'.

He referred to the government’s just announced decision to adopt two recommendations of the Board of Taxation to simplify the tax law for over 600,000 trusts, and so addressing two key areas of uncertainty for trusts following the High Court's decision in the Bamford case, which related to capital gains flowing from family trusts and affected about 600,000 taxpayers.

First, the amended law will clarify the definition of the income of a trust estate. This will address situations where the tax burden falls on a beneficiary despite not receiving the economic benefit. Second, the law will be amended to enable streaming of capital gains and franked distributions to beneficiaries.

He said that before the Bamford case, trusts commonly streamed income to particular beneficiaries and that the government wants to ensure that this flexibility can continue. These changes will apply for 2010-11 and later income years. “There are no easy answers and these are interim steps to ensure greater confidence and certainty in trusts. They will not solve all the issues highlighted by the Bamford case and the Gillard Government remains committed to updating and rewriting trust laws more broadly."

“I do want to emphasize that the government has taken swift action on trusts where others haven't. We don't believe trusts are any form of tax avoidance. We see trusts as a legitimate feature of how Australians conduct their financial affairs. And there will be more to come in this space.

“My overall point here is that the Gillard Government's forward-looking tax reform agenda seeks to position Australia to meet these challenges and take advantage of new opportunities for the benefit of all Australians, now and well into the future."

The Assistant Treasurer also talked about the government’s wider commitment to simplifying the tax system, saying that it was an objective built into basically every reform planned, announced and delivered. He said that greater tax certainty and reducing the compliance burden on individuals and business is important in promoting increased participation and productivity.

He referred to the optional standard deduction in lieu of claiming work related expenses and the cost of managing tax affairs, of AUD500 in 2012-13 and rising to AUD1,000 in 2013‑14; and a AUD5,000 small business instant asset write-off that will reward small businesses when they invest to grow and make tax time simpler for them.

“Modernizing and simplifying Australia's tax system and taking advantage of the possibilities offered by new technologies will provide substantial benefit to Australian taxpayers. For instance, the standard deduction is an important step on the way to a 'tick and flick' system of pre-filled tax returns. As I said in Canberra earlier this week, it will remove the hassle of keeping a shoebox full of receipts. When fully phased in about 6.4m Australians will save time and get a bigger tax return by just ticking the box”, he said.

Describing the Opposition's tax plans as “seriously absurd or seriously non-existent” he suggested that they stood for little more than opposing all of the Gillard Government reforms.

“They talk about wanting reform, but every single action they take is in fact anti-reform. They copied word for word the government's list of Henry Review rule outs, and then ruled out a further 13 recommendations. And they ruled out delivering any tax reform during a first term (had they been elected)."

“Their idea of tax reform seems to be nothing more sophisticated than a AUD6bn company tax increase during the election, to pay for their Paid Parental Leave scheme. And an expensive, time wasting thank you note on personal tax returns that is such bad public policy that I won't even bother your time with it."

“This is all the more disappointing because politics hasn't usually been like this. I think the current petty and cynical approach is beneath the Liberal Party's greater history. Regardless of political allegiances my belief is that the Liberals have, historically, at least been rational and thoughtful contributors to our nation's economic story."

“We are Australians, and it is a part of our idea of the Commonwealth that we pay taxes ungrudgingly in this fair-go country. It is our way of being civilised. It is everybody's way of being civilised. It is not a magic potion, it is not a magic pudding. But it is a way, and the best way, I believe, of using available resources for the common good”, he said.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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