The Board of Taxation is undertaking a review of ways to reduce red tape in the tax system to help ease the compliance burden on businesses and support productivity.
Pitcher Partners made a submission to the Board suggesting six key proposed reforms that will reduce costs and increase certainty for taxpayers in the middle market.
1) Fix family trust elections (FTEs)
- Introduce a limited review period of four years for Family Trust Distribution Tax liabilities.
- Allow the Commissioner a discretion for honest mistakes.
- Allow taxpayers to rely on ATO records of elections.
- Impact: Major certainty boost + ~$224m in savings.
2) Allow family group consolidation
- Allow family groups operating through multiple discretionary trusts to lodge one tax return.
- Impact: Streamlined compliance + ~$102m saved annually.
3) Clarify bare trust treatment
- Introduce a simple rule to ignore bare trusts for tax.
- Impact: Removes uncertainty and unnecessary lodgements.
4) Reduce trust resettlement risks
- Create clear rules so that minor changes can be made to trust deeds without tax risks.
- Impact: Avoid costly legal advice and rulings.
5) Align trust and company tax rules
- Reduce structural complexity by harmonising core tax settings for companies and trusts.
- Impact: Fewer entities needed, minimise Division 7A compliance + ~$20m in savings.
6) Allow use of accounting numbers for tax
- Let eligible taxpayers rely on accounting profit and loss items for certain items.
- Impact: Simpler return preparation + ~$44m in savings.
Read our full submission below:
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