FAAA submission: “long running unintended consequences” of proposed changes to minimum tax on discretionary trusts

Sarah Abood

The FAAA is concerned about the potential broader consequences of the Government’s plans for the minimum tax on discretionary trusts, seeking to “…highlight the potential significant implications of this proposal and long running unintended consequences that will likely emerge for many thousands of businesses in the future.”

In its submission to Treasury, the FAAA has made seven key recommendations:

• Consider better alternatives to a complete disallowance of tax credits for corporate beneficiaries. (For example, allowing corporate beneficiaries to benefit from tax credits in a similar way to other beneficiaries).
• Extend the exemptions available to farmers, to other businesses where intergenerational transfer of control is best facilitated via a discretionary trust.
• Extend the rollover relief transition period from three years to five years.
• Enable an exemption from the minimum tax to those entities that are in the process of restructuring during the transition period.
• Federal Government to coordinate with State Governments to provide stamp duty relief as part of the rollover relief arrangements.
• Greater flexibility to be provided in the rollover relief arrangements.
• Other alternatives to be considered to obtain the tax outcome policy objectives.

Read the full submission.