Accountants say the government has badly underestimated what it will cost family businesses to get advice on its planned trust tax changes. Treasury’s modelling assumes a default cost of $91.54 an hour, covering labour, payroll tax, super, rent and utilities.
The Lower House has passed a plan for a new 30% baseline tax on discretionary trusts from 1 July 2028. About 350,000 small and family businesses run through a trust. The government puts the one-off implementation cost at $780 million to $1.1 billion, with a mid-point of $939 million.
Treasury expects trusts that restructure to need about 120 hours of advice, or roughly $11,000 each at its rate. Natalie Lennon of Two Sides Accounting says most accountants charge $250 to $450 an hour for advisory work. At $350 an hour, the same 120 hours would cost about $42,000.
CPA Australia has warned the total compliance bill could reach $2.8 billion. The explanatory documents do admit tax agent fees may be higher, but say there is limited authoritative data on what they charge.
The bill now goes to the Senate, where an economics committee inquiry is due to report by 13 November.
What it means for your money
If your business runs through a discretionary trust, it is worth talking to your accountant early about likely costs and timing. Budget for advice at realistic market rates rather than the government’s estimate, and watch the Senate committee report next month.
Source: SmartCompany