Politics · Other · 2 hrs ago
Accountants challenge government estimate for trust tax reform costs
Australia’s House of Representatives has passed a plan to tax discretionary trusts at a 30% baseline rate from July 1, 2028.
The changes could affect about 350,000 small and family businesses that operate through trusts.
Before the changes take effect, some trusts may need professional advice or to restructure.
The government estimates that restructuring trusts would need about 120 hours of advice, using an hourly cost of $91.54.
Accountants say that rate is too low: one adviser said typical advisory fees are about $250 to $450 an hour.
CPA Australia warns that the one-off compliance bill could reach $2.8 billion, compared with the government’s estimate of $780 million to $1.1 billion.
The bill now goes to the Senate, where an economics committee is examining the reforms.
Tax agents say the government has underestimated the cost of professional advice for trusts affected by its tax reforms.
The government estimates one-off implementation costs of $780 million to $1.1 billion, with a midpoint of $939 million.
CPA Australia warns the one-off compliance bill could reach $2.8 billion.
The Lower House has passed a plan to impose a 30% baseline tax on discretionary trusts from July 1, 2028.
The government model assumes advice will cost $91.54 an hour, while accountants say specialist services typically cost more.
- Who
- Tax agents, including CPA Australia, are challenging the government’s cost estimates.
- What
- They say the estimated cost of professional advice for trust tax reform is too low.
- When
- The new baseline tax is planned to take effect on July 1, 2028.
- Where
- Australia.
- Why
- Accountants say trusts will need specialist advice and the government’s assumed rate of $91.54 an hour is below typical advisory fees.
Tax agents and CPA Australia
Australian government
Advice costs
Tax agents and CPA Australia
Tax agents say the government’s $91.54 hourly assumption is too low for specialist advice.
Australian government
The government’s model assumes an advice cost of $91.54 an hour.
Total implementation costs
Tax agents and CPA Australia
CPA Australia warns one-off compliance costs could reach $2.8 billion.
Australian government
The government estimates one-off implementation costs of $780 million to $1.1 billion, with a midpoint of $939 million.
The Council of Small Business Organisations Australia warned of significant compliance costs.
The Lower House had passed the plan, and the bill was set to go to the Senate.
The planned 30% baseline tax on discretionary trusts is due to take effect.
- Government hourly assumption
- $91.54
- Government one-off implementation estimate
- $780 million to $1.1 billion; midpoint $939 million
- CPA Australia compliance-cost warning
- Up to $2.8 billion
- Trusts affected
- About 350,000 small and family businesses
- Planned tax rate and start date
- 30% baseline tax from July 1, 2028
- Advice hours in government estimate
- About 120 hours for trusts that choose to restructure
3 sources
What people are saying
I am not sure there are any accountants in Australia charging below at least $150 per hour, and that is generous as most accountants charge around $250-$450 per hour for advisory services
The real cost isn’t only the hourly rate. It’s all the hours accountants know they can’t bill for.
Did anyone in Canberra think to ask a real accountant?