NSW Labor is distancing itself from Anthony Albanese’s new tax on discretionary trusts by declaring it would waive stamp duty if someone restructured their finances to avoid getting hit with a new Commonwealth tax.
State Treasurer Daniel Mookhey made the declaration about a stamp duty exemption a day after the Prime Minister’s Federal Labor Government introduced legislation to Parliament to impose a new minimum 30 per cent tax on trust income streams from July 1, 2028.
“NSW needs small businesses to thrive. We want them to grow. We want them to hire more people. We don’t want them to worry that their State is trying to make a windfall gain at their expense,” he said on Thursday.
“While the Federal Government’s proposed tax changes are still some way off, we want businesses to have as much certainty as possible, as early as possible, so they can carry on with more confidence.”
NSW Small Business Minister Janelle Saffin, a former Federal Labor MP who sat in the caucus with Mr Albanese from 2007 to 2013, said a stamp duty exemption was about providing certainty.
“Small businesses in NSW deserve clarity when navigating tax changes and we are giving them that,” she said.
With NSW Labor facing an election in March, the State Government is proposing to amend existing regulations so a trust can be restructured as an excluded election trust and avoid having to pay stamp duty.
Shadow treasurer Tim Wilson said Federal Labor’s new tax was just a revenue grab.
“This Government’s priorities are completely distorted. Not a single focus of the Albanese Government is focused on how to empower Australians, empower small business owners, or back communities,” he told reporters at Parliament House in Canberra on Thursday.
“The focus of the Albanese Government is how to feed themselves and how to take as much revenue as they can to support their rapacious appetite for spending, which is only going on to fuel inflation and undermine the Australian community.”
Federal Treasurer Jim Chalmers on Wednesday introduced legislation to Parliament for a new minimum 30 per cent tax on discretionary trust incomes from July 2028, arguing it better reflected the income tax paid by salary earners.
The changes affect family and discretionary trusts that are often used to divide assets during someone’s lifetime, along with testamentary trusts contained in a will where the beneficiaries aren’t individuals or a charity.
The likes of small business use discretionary trusts for asset protection and succession planning.
To avoid this tax, trusts would need to be restructured to become fixed, where distributions to beneficiaries can’t be altered.
The Federal Government is proposing to provide rollover relief from July 1, 2027, for trusts that restructured out of a discretionary trust into other arrangements, such as a company or a fixed trust.
A minimum 30 per cent capital gains tax on trusts comes into effect from that day when a business is sold.
The NSW Government is promising to consult small business organisations after Federal Parliament finalises its legislation.
Federal Labor needs the Greens in the Senate for the trust changes to become law, but the left-wing minor party has expressed concerns about trusts avoiding tax by paying private school fees.
Labor in June announced a carve-out for discretionary testamentary trusts, used by a trustee to divide assets following a death.
NSW Premier Chris Minns is aiming to become the State’s first Labor leader since 1984 to be re-elected with Labor in power Federally, in Mr Albanese’s home State.