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Income tax: tax avoidance through trusts and income of dependent children



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TREASURER

EMBARGO

PRESS RELEASE NO. 77

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STATEMENT BY THE HON JOHN HOWARD, MP, TREASURER

INCOME TAX: T®( AVOIDANCE THROUGH TRUSTS AND INCOME . OF DEPENDENT CHILDREN

It is already clear that some will attempt; to discredit the Government’s changed tak arrangements on family trusts by emotional references to their effect upon the earnings of children. . .

The fact is that the arrangements I announced last night will make the tax system fairer. They will take away the tax advantage previously enjoyed by predominantly high income earners who could split their income and thus

reduce their tax liability through the use of trusts or other arrangements involving their children. .

The new rules will not affect the.income from deceased estates as has been incorrectly claimed by the Secretary of the Taxpayers Association, Mr Risstrom.

The new rules will not affect income earned by children from personal exertion. . .

The new rules will only affect the income of children if they receive non-employment income in excess of $416 per year. In the case of a child earning interest on accumulated savings, more than $5,200 would need

to be saved and invested at 8 per cent interest before the new. arrangements would have any effect.

Any suggestion that the new rules are "taxing the earnings of newsboys" is deliberately misleading and clearly designed to undermine public acceptance of a fundamentally fair and necessary reform of our taxation system.

27 July 1979