Tax partner Jonathan Ortner is quoted extensively in today’s AFR, warning businesses of all shapes sizes about an ATO crackdown on family trust distributions tax dating back almost 30 years.
The crackdown is associated with what are known as family trust elections and the payment of family trust distributions tax dating back to 1998.
Jonathan explains that these provisions are complex and poorly understood – even among seasoned advisers – and he is seeing serious issues arise in practice.
“But the consequences are severe for businesses of all shapes and sizes,” he said. “The farmers are impacted by this, the fruit shop owner on the corner, the mum and dad investors and the large private groups. It is all pervasive.”
“I truly believe that neither parliament nor the ATO in the 1990s fully thought through, or could comprehend, what a private group might look like in 2025.”
He said the pursuit of back taxes and the interest on these was costing some family trusts in the many millions of dollars and that the ATO’s actions had the potential to force some trustees into insolvency and directors into bankruptcy if they were unable to meet their tax liabilities.
