CA ANZ voices support for trust administration modernisation

CA ANZ has expressed its support of the government's efforts, as currently the trust tax return contained boxes for the reporting of a beneficiary’s TFN, which was not compulsory to complete, despite needing to be.

Susan Franks, CA ANZ tax, super and financial services lead, said the amendments aimed to support pre-filling capabilities for beneficiaries’ income tax returns and ensure accurate tax payments by trustees and beneficiaries.

“CA ANZ supports these goals and the broader intent to reduce compliance costs; however, the proposed amendments will not achieve the expected pre-fill benefits unless the current due dates for tax returns are changed,” she said.

“The proposals will, however, allow the ATO to improve its data matching and auditing ability, and consideration should be given to modifying the explanatory memorandum to ensure that the achievable purposes of better data matching and reducing red tape are highlighted rather than pre-filling.”

Within the explanatory memorandum (EM), CA ANZ said modification should be applied to paragraphs 1.1, 1.5 and 1.12, as it would be “an opportunity to update legislation and reduce red tape by consolidating reporting requirements”.

In the current rules, closely held trusts needed to report distributions made to other trustees and include the TFN of the trustee in existing trust tax returns.  

“To further reduce red tape, it would be useful for the amendments to repeal the existing provisions and include all reporting of TFNs associated with distributions in the current proposal,” Franks said.

“This will reduce confusion as to which provisions apply and allow the reporting process within both government and the private sector to be streamlined.”

In addition, the professional accounting body noted that the EM stated that trustees needed to report beneficiary TFNs when the trust tax return is lodged to improve ATO matching and pre-fill for beneficiaries. This could not be achieved based on individual beneficiaries lodging earlier and closely held trusts lodging later.

Franks also suggested simplifying the legislation by removing the trustee beneficiary non-disclosure tax regime, naming it a “major opportunity to simplify, reduce red tape and improve clarity in the legislation”.

Overall, the body shared that it supported the government's commitment to modernising trust and beneficiary reporting and enhancing the efficiency of Australia’s tax system.

“We also encourage Treasury to take this opportunity to simplify the legislative framework by removing the outdated reporting regime in relation to trustee beneficiaries which is supported by an unnecessary penalty tax regime.”