Story in todays paper, stating unit trusts are unfairly taxed. Anyone able to further explain why this maybe the case?
http://www.news.com.au/dailytelegraph/story/0,22049,22775375-5006010,00.html
A tax on savings
Article from: The Sunday Telegraph
By Nick Gardner
November 18, 2007 12:00am
MILLIONS of investors in unit trusts and listed property funds are being overtaxed by hundreds of millions of dollars a year because of a "fundamentally flawed" tax system, experts say.
"Mum and dad'' investors are being hit with tax bills that grossly exaggerate their true liabilities while wealthy investors are given generous concessions that significantly reduce their tax bills.
Tax lawyers and the Institute of Chartered Accountants say the tax system for unit trusts needs reform.
"The tax system for trusts in Australia is a one-way street - in favour of the Treasury. Almost everybody who invests in unit trusts or listed property funds is affected to some degree,'' warns Duncan Baxter, a tax expert at lawyers Blake Dawson.
Documents obtained by The Sunday Telegraph show there have been top-level talks involving Federal Treasury and the Institute of Chartered Accountants over anomalies in unit trust taxation, but nothing has been done to resolve it.
Ali Noroozi, tax counsel with the Institute of Chartered Accountants, said: "We have been pushing this issue for some time and it needs legislative change.
"There are a number of problems with taxation of trusts ... and they have all been pushed to one side. The very foundation of trust taxation is ripe for reform.''
The revelations could throw the $1 trillion managed-fund industry into turmoil as investors realise they are being taxed unfairly.
Investment and Financial Services Association chief executive Richard Gilbert conceded there were problems. He said: "When you collectivise money (in unit trusts), there will obviously be issues you have to deal with and sometimes they aren't dealt with fully; but you have to look at the whole package, which I think remains good value.''
The root of the overtaxing problem is the way in which tax concessions on property investments, held by unit trusts, result in investors being taxed on otherwise tax-free money - effectively, they are taxed twice on the same sum.
But investors who hold property outside a trust aren't, and benefit from concessions. Mr Baxter added: "The tax consequences are supposed to be the same for trust investors as for those who invest directly. Clearly that isn't the case and means people wealthy enough to invest directly are given preferential treatment.''
Tax specialist Chris Batten is launching an advertising campaign today urging change.
"The Treasury knows the system's unfair. Why aren't they doing anything about it?'' he said.
http://www.news.com.au/dailytelegraph/story/0,22049,22775375-5006010,00.html
A tax on savings
Article from: The Sunday Telegraph
By Nick Gardner
November 18, 2007 12:00am
MILLIONS of investors in unit trusts and listed property funds are being overtaxed by hundreds of millions of dollars a year because of a "fundamentally flawed" tax system, experts say.
"Mum and dad'' investors are being hit with tax bills that grossly exaggerate their true liabilities while wealthy investors are given generous concessions that significantly reduce their tax bills.
Tax lawyers and the Institute of Chartered Accountants say the tax system for unit trusts needs reform.
"The tax system for trusts in Australia is a one-way street - in favour of the Treasury. Almost everybody who invests in unit trusts or listed property funds is affected to some degree,'' warns Duncan Baxter, a tax expert at lawyers Blake Dawson.
Documents obtained by The Sunday Telegraph show there have been top-level talks involving Federal Treasury and the Institute of Chartered Accountants over anomalies in unit trust taxation, but nothing has been done to resolve it.
Ali Noroozi, tax counsel with the Institute of Chartered Accountants, said: "We have been pushing this issue for some time and it needs legislative change.
"There are a number of problems with taxation of trusts ... and they have all been pushed to one side. The very foundation of trust taxation is ripe for reform.''
The revelations could throw the $1 trillion managed-fund industry into turmoil as investors realise they are being taxed unfairly.
Investment and Financial Services Association chief executive Richard Gilbert conceded there were problems. He said: "When you collectivise money (in unit trusts), there will obviously be issues you have to deal with and sometimes they aren't dealt with fully; but you have to look at the whole package, which I think remains good value.''
The root of the overtaxing problem is the way in which tax concessions on property investments, held by unit trusts, result in investors being taxed on otherwise tax-free money - effectively, they are taxed twice on the same sum.
But investors who hold property outside a trust aren't, and benefit from concessions. Mr Baxter added: "The tax consequences are supposed to be the same for trust investors as for those who invest directly. Clearly that isn't the case and means people wealthy enough to invest directly are given preferential treatment.''
Tax specialist Chris Batten is launching an advertising campaign today urging change.
"The Treasury knows the system's unfair. Why aren't they doing anything about it?'' he said.
