Budget 2013: ATO gets $68 million to crack down on trusts

The Australian Tax Office has scored an additional $67.9 million in this year’s budget to target trust misuse.

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 will also focus on what the government dubs “contrived loan arrangements” and the promotors of tax avoidance and evasion schemes.

The Tax Office will target known tax scheme designers, promoters, individuals and businesses who participate in such arrangements through compliance activity.

“This measure will tackle the issue of abusive trust schemes in the wider community and encourage active compliance by taxpayers,” according to the budget papers.

The crackdown is expected to bring in an additional $311 million in revenue.
Assistant Treasurer David Bradbury said in a statement “emerging evidence” showed a significant increase in the level of trust-based non-compliance.

“It is important the ATO has the appropriate resources to tackle tax avoidance through complex structures like trusts,” he said.

Bradbury also indicated future reform of the tax laws surrounding trusts and said the government will use intelligence gathered by the ATO to guide the next phase of its consultation on trust taxation law 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,” he said.

Treasury will consult with the ATO on how to progress with the reform and is expected to report back at the end of July 2013.