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🇦🇺 Australia /Economy & Trade

Small businesses caught between Labor's trust tax and stamp duty uncertainty

From ABC Australia · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Sources not specified New plan
  • Labor's proposed 30% minimum tax on trust distributions impacts about 210,000 small businesses operating through discretionary trusts.
  • Businesses need clarity from state governments on stamp duty waivers to restructure and avoid the tax, as federal rollover relief alone may not be enough.
  • The government is consulting on the tax, set to take effect from mid-2028, with industry groups also concerned about the costs of restructuring.

Small businesses face uncertainty as they navigate Labor's proposed 30% minimum tax on trust distributions, with state government decisions on stamp duty crucial for any potential restructuring.

To me this is absolutely crucial.

— Geraldine MagareyChartered Accountants Australia and New Zealand group executive of policy and international Geraldine Magarey on the importance of state government decisions on stamp duty.

Around 210,000 small businesses currently use discretionary trusts and could be affected by the tax. Labor has offered federal rollover relief, exempting capital gains and income tax on asset transfers during restructuring. However, this relief may prove insufficient if states and territories impose significant stamp duty charges.

Businesses need certainty now … and it plays a very big part in the decision whether to restructure and what form that takes.

— Geraldine MagareyGeraldine Magarey explaining the need for clarity on stamp duty for small businesses considering restructuring.

Industry groups, including Chartered Accountants Australia and New Zealand, emphasize the critical need for a coordinated approach between federal and state governments. "Businesses need certainty now," said Geraldine Magarey, group executive of policy and international at the accounting body. "It plays a very big part in the decision whether to restructure and what form that takes."

They can't make that decision without knowing.

— Geraldine MagareyGeraldine Magarey on the dependency of business decisions on stamp duty information.

Beyond stamp duty, concerns also exist regarding the financial burden of accounting and legal fees associated with restructuring. Treasurer Jim Chalmers stated that over 90% of small businesses would be unaffected and described the proposed rollover relief as "generous." The government is currently seeking feedback on the tax, which is slated to be implemented from mid-2028.

We will implement these reforms in an efficient and effective way that minimises cost and disruption to businesses.

— Jim ChalmersTreasurer Jim Chalmers on the government's approach to the proposed tax reforms.
DistantNews Editorial

Originally published by ABC Australia in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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