Labor kept us in the dark on trusts, say farmers

Bill Shorten’s imminent tax overhaul has fuelled alarm that up to 28,000 farmers’ trusts could be raided.

National Farmers Federation chief executive Tony Mahar.

Bill Shorten’s proposed tax overhaul has fuelled alarm that up to 28,000 trusts in the primary production sector could be raided by a future Labor government, with the National Farmers Federation seeking urgent clarification on how rural communities could be affected.

As opposition finance spokesman Jim Chalmers confirmed Labor had been encouraged to look at winding back the tax ­advantages provided by trusts, NFF chief executive Tony Mahar revealed there had been no consultation with the sector on the ALP’s changes.

“Over 90 per cent of farm business in Australia are family owned,” Mr Mahar told The Australian. “The use of trusts is commonplace. They are a useful tool that allows business to smooth out volatility in income, disperse funds to partners and family members and also enable succession planning.”

Scott Morrison also noted yesterday that many users of family trusts worked “on the land”.

“It’s a pretty simple reason why you do it,” the Treasurer told 2SM radio. “You have a good year and you pay an amount in tax, and the next year, it’s a bad year ... and you are borrowing money to pay last year’s tax bill.

“These are all legitimate ­reasons of why we have a trust scheme in this country and Bill Shorten is coming after that.”

Dr Chalmers and opposition Treasury spokesman Chris Bowen continued to entertain the prospect yesterday that trusts would be included in a tax overhaul in a move that risks a backlash from the small business community.

The push comes despite the fact that more than a dozen Labor MPs use family trusts or have them as part of their extended family ­arrangements, with many yesterday saying the trusts had been ­established by other family members.

Labor deputy leader Tanya Plibersek has disclosed that her husband, Michael Coutts-Trotter, the secretary of the NSW Department of Family and Community Services, has a family trust of which he is the sole beneficiary.

Mr Coutts-Trotter yesterday told The Australian the trust was “established by my mum more than 20 years ago and offers me no tax benefit”.

“I pay income tax on any earnings,” Mr Coutts-Trotter said.

A spokesman for Victorian Labor MP Peter Khalil — who is a beneficiary of a family trust — said that Mr Khalil was “involved in a family business prior to his election to parliament” and “followed professional advice in the course of organising his financial affairs and he resigned as a director prior to his election”.

NSW Labor MP Meryl Swanson, who is also the beneficiary of a family trust, said: “Over the years my husband and I have taken ­advice from our accountant on the best way to manage our income. I support the leader’s plans to make the taxation system fairer for all Australians and welcome analysis on trust use in Australia.”

Mr Bowen yesterday said Labor was prepared to take “difficult and bold decisions” in a bid to return the budget to balance and look for reforms that improved the fairness of the tax system.

“I think the Australian people are up for a difficult debate, I think the Australian people are sick of business as usual and are ready for a political party to call it as it is, which is: some things have to give,” he told ABC radio.

Dr Chalmers also told Sky News it was reasonable for Labor to look at changing the arrangements for trusts in the interests of developing a fairer tax system. “What people are saying is that we should consider and look at the tax arrangements for trusts so that tax arrangements are as fair as possible and so the tax concessions aren’t going to people who need them the least,” he said.

But Mr Mahar said it was “disappointing” the NFF had not been consulted given the widespread use of trusts in the agricultural sector and contacted Labor to seek further clarification on the changes.