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Labor walks tightrope as tax overhaul alarms startups and investors
Anthony Albanese (left) says the government is consulting on how to ensure tax changes do not disproportionately hurt startups and venture capital. (ABC News: Matt Roberts)
Labor MPs say many Australians have responded positively to housing tax reforms, but there is concern that changes to capital gains tax and discretionary trusts will become a tough sell.
Uncertainty around the tax measures is fuelling opposition among some young investors and business owners, while the Coalition says Labor is trying to freeload off entrepreneurs.
The federal government is consulting on how it can prevent unintended consequences for startups and will offer transition support for small businesses as they restructure to avoid the new tax on discretionary trusts.
Money advice: I make $180k a year through my trust. How will the new tax affect me?
My wife and I are in our late 50s and operate a small business through our family trust. The profit is usually about $180,000 a year, and that’s distributed as $60,000 each to my wife, myself and our 19-year-old daughter, who is at university. How are we likely to be affected by the proposal to levy a flat tax of 30 per cent on family trusts?
You are likely to be hit hard. Under the present arrangements, you probably pay about $9000 tax a year each. That’s a total of $27,000 in tax if the money is distributed equally among the family. Under the proposed arrangements, the trust would cop a flat tax of 30 per cent, which would be $54,000, so your tax would effectively double.
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Small businesses fear budget changes will take profits
Start-up founders are concerned capital gains tax changes will take their profits and stifle future innovation.
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