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Taxing the family home



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MEDIA RELEASE

4 September 1998

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Taxing the family home i

The proposal by both the Coalition and the Opposition to impose Fringe Benefits Tax on trusts may leave many home-owners with a hefty and unexpected annual FBT bill, the Australian

“The imposition of FBT on trusts which provide benefits to beneficiar ies will bring a number of people into the FBT net who should not be there, The danger is that people who have put their family home in a trust will have to pay large FBT bills for the privilege o f living at home,” Paul Hockridge, APSCPA Tax Spokesman said today,

“For a home with a market value o f say, $300,000, the FBT bill could be over $14,000 per annum, based on a notional rent of $15,000 per annum. If there is no deduction available for the FBT bill, and there would not be if the tr ustee isn’t charging the beneficiaries rent for living in the home, this represents a new annual tax of 94% o f the value o f the use of the property.

“The AS CP A is calling on all parties to release details o f their proposals as a matter of urgency.

“People place their homes in a trust for a variety o f reasons. Often there are no tax deductions being claimed and there are no income tax or capital gains tax benefits. Sometimes, it is the only option where there are family disputes. If the family home remains an asset of the par ents, on their death there will be room for family members to dispute the wills. Other times, it is to

ensure that the family home is protected from business and other career risks.

“Under tire proposed changes, the family home could be considered to be a benefit provided by a trust to a beneficiary and the trustee could become liable to FBT, To date, there is no requirement in the tax reform announcements that the trust has to have been claiming any sort o f lax deduction before this new tax liability can arise.

“Trusts are clearly a political target but we must be sure that we do not unwittingly tax ordinary family planning arrangements which would otherwise have no tax impact,” Mr Hockridge said.

Contact: paui Hockridge, ASCPA Tax spokesman, 03 9819 1966 (bh), 014 013 080 (mob), or Lisa Armstrong, PR Manager - NSW, 02 9375 6205 (bh), 0414 834 700 (mob).

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Australian Society of Certified Practising Accountants 170 Queen Street, Melbourne, Victoria 3000 Ί ' , , | η * ' Λ / Λ / T* ----- . Λ 1 *! I I <■*