Joe Hockey, the shadow treasurer made a speach to the ICAA national tax conference this week suggesting that trusts should be taxed as companies.
He was suggesting that the current tax laws are too complex and difficult to administer in respect of trusts and therefore it just be simpler and easier for everyone if we taxed them as companies at the flat rate of 30%.
Although this sounds like a simple proposition it clearly shows that Joe Hockey doesn’t fully understand the issues at hand, hasn’t done any research on the history of this issue and definitely didn’t consult his fellow liberal & national party colleagues.
Peter Costello in the early 2000′s around the same time we had tax reform around GST, pushed the idea of entity taxation whereby trusts would be taxed as companies. This was met by major opposition among small business owners and farmers alike. These changes looked like getting over the line at the time until the farmers put real pressure on the national party who convinced Costello and Howard they couldn’t politically make these changes.
Despite the profession believing entity taxation was dead and buried Joe Hockey decided to bring it up again. However thankfully he was quickly pulled into line by the Liberal & National Party.