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Wednesday, 10 February 1999
Page: 2401


Mr Martin Ferguson asked the Treasurer, upon notice, on 11 November 1998:

(1) Did he undertake in the 1997-98 Budget to publish a discussion paper on the taxation of trusts.

(2) Has he acted to prepare and publish a discussion paper on the taxation of trusts; if so, (a) what action has he taken and (b) at what cost; if not, why not.

(3) Has the Government established a backbench consultative committee on taxation; if so, who are its members, on how many occasions did it meet, how many meetings did (i) he and (ii) the Minister for Finance and Administration attend, what resources did (i) his Department and (ii) the Department of Finance and Administration supply to the committee and at what cost to the Commonwealth.

(4) How do discretionary family trusts operate and is it possible for a Member of Parliament to have his or her salary and electorate allowance paid into a family trust to minimise taxation.


Mr Costello (Treasurer) —The answer to the honourable member's question is as follows:

(1) Yes.

(2) On 23 February 1998 I announced that the review of trusts would proceed as part of the Government's tax reform program, in place of the officials' paper announced in the 1997-98 Budget.

A New Taxation System proposed taxing trusts like companies under a new redesigned company tax system. Mr John Ralph AO is currently chairing a Review of Business Taxation that will consult and report, among other things, on the proposed framework for taxing trusts like companies and on transitional and implementation details.

(3) There is no backbench consultative committee on taxation.

(4) A discretionary trust is a trust where the trustee has a discretion to choose the beneficiary who would receive distributions of income or capital or both from the trust.

Members of Parliament cannot minimise their tax by having their salary and electorate allowance paid into a family trust.