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Budget: ATO taskforce to target trust misuse

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Today the Assistant Treasurer announced that the Government will provide the ATO with $67.9 million to target the use of complex tax structures by high wealth individuals to avoid tax.

The ATO will target the exploitation of trusts to conceal income, mischaracterise transactions and artificially reduce trust income amounts to avoid or reduce tax.

"It is important that the ATO has the appropriate resources to tackle tax avoidance through complex structures like trusts," said Mr Bradbury.

"Emerging evidence, including substantial ATO data from two recent law enforcement operations, shows a significant increase in the level of trust-based non-compliance."

The ATO will target the use of contrived loan arrangements and the promoters of tax avoidance and evasion schemes. The ATO will report regularly to the Government on the types of misuse it is uncovering. This compliance work is expected to result in a net gain to revenue of $311.1 million over the forward estimates.

The Government will also use intelligence gathered by the ATO to inform the next phase of its consultation on trust taxation reform.

"The Government has received a wide range of views on how the tax law could be amended to reduce complexity and compliance costs and ensure that opportunities for manipulation of tax liabilities are minimised. The message from stakeholders is that there is no clear consensus on the best approach to deal with these issues.

I have therefore asked Treasury to consult with the ATO's National Tax Liaison Group (NTLG) Trust Consultation Sub-group on the most

appropriate way to progress the reform, and in particular to address integrity concerns arising from the mismatch between trust and tax concepts of income.

"The NTLG is well placed to advise the Government on these issues with its membership spanning a broad spectrum of accounting and legal bodies, many of which made submissions on the October 2012 policy options paper", said Mr Bradbury.

It is expected that Treasury will report back to Government on the outcomes of the consultation by the end of July 2013.

14 May 2013