Australia's Greens demand closure of private school loophole — ABC News Australia
In Australia, the Greens party is demanding that a provision allowing exemptions for payments to charitable, non-profit and other tax-exempt organisations, including private schools, be removed from a bill on a new minimum 30% tax on certain trusts. As ABC News reports, the party believes this could allow wealthy parents to pay for their children's private school education from trust funds while avoiding the new tax.
Finance Minister Jim Chalmers is due to introduce the bill on Wednesday. The proposed tax will apply to discretionary trusts — structures that allow owners to distribute funds among family members, holding companies or other beneficiaries. The government presents the initiative as a measure against using trusts to reduce tax liabilities and expects to raise $4.5 billion in the first year it is in force.
The Greens' position
The Greens' economic spokesperson, Nick McKim, said that people wealthy enough to establish trusts should not have a tax advantage for paying for private education. The party also called for a Senate inquiry into the bill, saying that its early version had been weakened.
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In the draft released last month, the government stated its intention to set an annual cap on funds exempt from the new tax, but the specific size of this limit has not yet been determined. The proposed provision does not change the current tax treatment of private schools, but the Greens believe that the exemption for charitable payments will make such a mechanism more attractive.
Business objections
Business groups and the opposition also oppose the reform, stressing that discretionary trusts are used for legitimate purposes, including by small business owners. According to the government's estimate, in 2022–2023 such trusts were used by 350,000 active small businesses, or approximately one in six. Treasury analysis indicates that 140,000 of them will not pay the new tax.
The government has also outlined exemptions for family farms held in trusts, charitable trusts and trusts used for estate management. The government promises to help some businesses with restructuring, although there are concerns about the need to pay stamp duty in states and territories if a trust is converted into a company. Dale Boccabella, an associate professor of accounting and taxation at the University of New South Wales, warned that every concession in complex trust legislation can create new opportunities for tax avoidance.
