Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move:

That the following matter be referred to the Economics References Committee for inquiry and report by 29 November 2017:

The use of discretionary trusts in Australia, with particular reference to:

(a) the structure and purpose of discretionary trusts;

(b) the process of establishing discretionary trusts;

(c) the role and profile of trustees and beneficiaries across different personal and commercial sectors;

(d) the current taxation structure for discretionary trusts, including the extent of tax minimisation and avoidance;

(e) alternative taxation structures for discretionary trusts, including any tax minimisation and avoidance issues; and

(f) any other related matters.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

I seek leave to make a short statement.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Leave is granted for one minute.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

The government does not support the motion. The coalition government knows that trusts are a legitimate structure providing asset protection and flexibility in cash flow. They are also commonly used in succession and estate planning. Labor's plan to impose a minimum 30 per cent tax on distributions by discretionary trusts is just another Labor tax grab on small businesses. The Leader of the Opposition, who once supported trusts, needs to explain why he's changed his mind and why Labor is exempting farm trusts but not those small businesses providing farmers with farm supplies such as fertiliser for crops or stockfeed for livestock. They also experience lumpy income. There is no rationale for this referral, which will only add strain to the existing workloads of Senate committees and the committee secretariats in particular.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I seek leave to make a short statement.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Leave is granted for one minute.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I moved this motion seeking to have this Senate inquiry because the Greens have campaigned for changes to taxation on discretionary trusts. We took to the last election a comprehensive policy, fully costed by the Parliamentary Budget Office, to tax distributions at a level that corporations are taxed at. We did a lot of work on this, and we feel this is a very important area. Saying that, I recognise the complexity involved in tax law around discretionary trusts. I recognise they do have legitimate purposes; however, we thought this was a really good opportunity to show how the system is being rorted. The PBO costed this at nearly $5 billion in revenue over the forward estimates that we could use for schools and hospitals if we cracked down on this, but we acknowledge we want to get it right. There may be unintended consequences from policy changes. We hope this will be implemented in a future government, but this is a really good opportunity for us to get the detail right.

Question negatived.