Senate Economics Legislation Committee [Part 2], , 1:08:44 to 1:12:12
Senator Bragg questions the ATO on Family Trust Elections (FTE) and the integrity rules designed to prevent the abuse of trusts for tax planning purposes.
Topics: Integrity, Law reform
Speakers: Jeremy Hirschhorn, Senator Andrew Bragg, Unknown Speaker, Senator Lisa Darmanin
Yeah. Thank you, Senator Bragg.
>> Thanks very much. I wanted to ask you about the family trust election and family trust distribution tax Who can I ask these questions to? Um,
Senator Jeremy Hershaw, the second commissioner compliance and engagement group. I'll I'll do my best.
>> So, was there a change in interpretation or change in practice in relation to these these trusts?
so Senator here so just sorry to help with the context of the question. the fact that it became into the public domain as an issue in 2024. You're asking if that was a result of a change in AT stance.
>> Yeah.
>> Uh Senator, in short, it was not a it was not as a result of a change in ATS stance. >> Okay. Um I I think what happened was >> uh that uh a couple of matters uh which which came up during ordinary reviews and audits um came into the public domain. >> And uh caused many participants to review their affairs.
>> Okay. So um how much has been ra so these are effectively historical mistakes that have been made is that right?
>> Um yes so if I to give a bit of context so the there were there have been various uh integrity rules over time which have been introduced in relation to uh the abuse of trust for tax planning purposes. the family trust election regime was brought in as a regime for genuine family trusts uh to effectively stay outside those integrity regimes.
>> Yeah.
>> Um to be unaffected by them. So the idea
was that they wouldn't be able to take losses outside of the family
>> as long as you start. So the idea was that as long as you you were genuinely a sort of a solid family >> trust uh clustered around an an individual and so there's there's a concept of a sort of a core individual. Um what has happened over time is that my perspect well a perspective would be that groups got more complex. >> Sometimes groups and their advisers forgot past elections and did things which were contrary to the contrary to the elected family group. >> Yeah. and triggered uh consequences um and those consequences uh were deliberately set at a harsh level to stop uh people abusing the family trust election. What has become clear over the last couple of years is that many family groups and their advisers have done things inconsistent with their family trust elections have and have potentially triggered those harsh consequences.
>> Yeah. And have have have any been
>> Um, Senator, to the best of my knowledge, nobody has been bankrupted.
>> Okay. How much revenue has been raised through these me these initiatives?