Presumably accountants are advising clients that to avoid moving into a higher tax bracket they should consider discretionary trusts. Many accountants aren't able to offer direct financial advice but can nudge clients in the right direction.
The tax office has revealed thousands of high-income Australians are using trusts to sneak into lower tax thresholds, backing claims by the Labor Party that discretionary trusts are being used to avoid tax.
Australian Taxation Office figures released to a Senate committee showed the extent to which people were using trusts to avoid being pushed into higher tax thresholds.
There were spikes in the number of people who declared taxable income just below the $37,000, $80,000 and $180,000 thresholds at which tax rates increased.
In the 2015-16 financial year, there were 14,377 people with an income of between $179,000 and $180,000. But there were 8407 earning between $178,000 and $179,000 and 8236 who earned between $180,000 and $181,000.
There are similar, albeit smaller, spikes just below the former $80,000 threshold and the $37,000 threshold.
The tax office said there were legitimate reasons for the “spike” in the number of people below each of the three thresholds, with one of those being the use of trusts.
“The ATO undertook analysis of this in the past and found that taxpayers ‘spiking’ just below thresholds at $37,000, $80,000 and $180,000 have a higher incidence of distributions from trusts,” it noted.
The $80,000 threshold has since been increased to $87,000, with experts believing the spike is likely to shift.
