The New South Wales government has moved to clarify that stamp duty will not be charged on trustees switching their funds from discretionary to fixed trusts, in response to upcoming federal tax reforms. A Treasury spokesman confirmed that the design of the bill would prevent states or territories from imposing stamp duty in such cases, welcoming NSW’s steps to solidify this interpretation.
Federal Treasurer Dr Jim Chalmers acknowledged ongoing negotiations between state and federal authorities concerning how states might respond to the commonwealth’s proposed tax changes, particularly regarding duties and fees on trustees. Several revenue offices, including those in NSW, had recently been uncertain about whether stamp duty would apply under the new regime.
Queensland Treasurer David Janetzki criticized the federal government’s tax overhaul and distanced his state from NSW’s approach. Janetzki stated that Queensland would not compensate for what he described as mismanagement by the federal government in its tax legislation, emphasizing his government’s opposition to the reforms.
Professional accounting body CPA Australia raised concerns over the extent of ministerial discretion permitted under the bill, which includes 12 powers allowing amendments to the legislation without parliamentary oversight. Jenny Wong, CPA Australia’s lead tax specialist, highlighted that key rules concerning collection, reporting, and integrity would be defined later through legislation and Australian Taxation Office guidance expected only after the law’s passage. She emphasized that the restructure rollover option, set to commence on July 1, 2027, cannot be reversed once chosen.
Opposition Treasury spokesman Tim Wilson criticized the unresolved legislative details, warning that the unspecified ministerial instruments reflected a lack of clarity on how the new taxes would affect small businesses. He contended that increased ministerial powers signaled uncertainty and potential disruption.
A spokesman for Dr Chalmers described the undisclosed rules as narrowly scoped and noted it is common for legislation of this nature to allow for additional rule-making subject to parliamentary oversight.
Tax consultancy RSM Australia said the bill did not address several core issues, including the ongoing double taxation of income distributed to companies. Partners Liam Teledan and Adam Crowley noted the lack of relief for low-income beneficiaries, trust or beneficiary losses, and vulnerable adult beneficiaries. They further observed that trusts without a family trust election remain dependent on an unreleased ministerial instrument, with some provisions, such as rules for testamentary trusts established after July 1, 2028, becoming more stringent.
Estate planning lawyer Rachel Rose said the government’s exemption of testamentary trusts from the minimum 30 percent tax aimed to avoid a death tax but pointed out that many existing wills incorporating such trusts would not qualify, potentially requiring rewrites of decades-old documents.
In response to pressure from various sectors, Dr Chalmers announced a new exemption from negative gearing reforms for retirement villages and aged care homes. Industry representatives viewed this as a significant concession. Daniel Gannon, executive director of the Retirement Living Council, described the exemption as crucial, warning that including retirement villages in the reforms would harm future housing development.
Conversely, Master Builders Australia chief executive Denita Wawn criticized the government for lacking a practical understanding of mounting pressures on small businesses.
Dr Chalmers and Greens Party representatives defended the reforms, asserting they would impact only about 10 percent of businesses and mainly target the wealthiest. Greens leader David Shoebridge indicated conditional support for the legislation, provided there are measures to prevent parents from using trusts to avoid taxes on private school fees, and dismissed estimates that the reforms would impose $13.3 billion in costs on businesses as exaggerated.