"We commend the NSW Government for showing clear leadership in resolving the uncertainty over trust taxation afflicting its businesses and we need other states to follow," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.
"Changes to tax arrangements for discretionary trusts announced in the federal budget may require businesses structured through a trust to transition to different arrangements. While the Commonwealth has extended roll-over relief to affected businesses, there has remained ambiguities around whether state-level transfer duties would still apply.
"We should have never got to this place.
"The NSW Government has acted decisively to provide certainty for its businesses. In announcing a matching roll-over relief mechanism, it has confirmed that those which make an Excluded Election Trust (EET) following the federal reforms will not face transfer duty liabilities in NSW.
"This provides tax certainty for the approximately 120,000 NSW businesses structured through a trust arrangement. It also ensures they do not face additional tax bills for complying with the intent of federal tax reforms.
"This is the right thing to do – one-off trust elections occurring due to federal tax changes are not genuine business transfers, and should not be taxed as such. NSW businesses now have the certainty to plan their tax affairs ahead of the introduction of the new trusts rules.
"Australian Industry Group has engaged all state and territory treasurers on this matter, and we appreciate our constructive engagement with the NSW Government. We will continue to work with the other states to seek solutions for the remaining 370,000 trust-structured businesses in Australia," Mr Willox said.
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