00:02It's a bit like that, isn't it, Fawzia?
00:04It doesn't get more complex in the tax code than this.
00:06So, look, this is a tax not on all trusts, but on a subset.
00:10And you mentioned the word discretionary there.
00:12That's the key one.
00:13What Labor is interested in is certain people that they say
00:16use discretion within trusts.
00:18That is flexibility about where you park the money,
00:21perhaps putting it against the names of your children,
00:23perhaps parking it in a holding company,
00:25a variety of complex structures that Labor says
00:28help people to pay a lot less tax than they would
00:31if they earned income through the ordinary income tax system.
00:35And so a 30% minimum tax is supposed to capture those people.
00:38The challenge for Labor, and where this does get so complex,
00:42is zeroing in on those trusts without capturing other trusts
00:46that Labor doesn't want to be accused of stinging with a tax.
00:49One of the levels of criticism that gets thrown at the government
00:52is about small businesses,
00:53but there are all sorts of other different kinds of trusts,
00:56farms, charitable trusts, that Labor doesn't want to be stinging.
00:59So on the one hand, it wants to be able to write the laws
01:01in a very precise way to get only those it thinks
01:04are trying to use trusts to minimize their tax bills.
01:07But on the other hand, there's all this talk about loopholes.
01:10They don't want to write the laws in such a way that's so broad
01:13that they can't get those people that they're trying to get at.
01:15And there are lawyers and accountants who go to work in this space
01:18and make it even more complicated.
01:20That's the balance that Labor's trying to strike.
01:22Yeah, that's one of the concerns that the Greens Party had, didn't they?
01:26And they said there are far too many loopholes in this proposal.
01:30Yes, that's right.
01:31They come very much from that end,
01:32saying that Labor has too many exceptions and carve-outs here
01:36trying to please the business groups.
01:38And the one that they're particularly focused on
01:40is an exemption for charitable giving,
01:42that up to a certain cap,
01:43money coming out of discretionary trusts
01:45and going to either charities or other community organisations
01:48that don't pay tax can be exempt.
01:51And that list includes, the Greens say, private schools.
01:55So there's some debate about whether this covers private school fees
01:58or other payments to private schools
02:00that perhaps might get a little bit knocked off the fees,
02:02but the Greens are saying things like that
02:04don't pass the sniff test to them,
02:06that they would like those kinds of loopholes to be closed
02:09for the law to take a tougher view of them.
02:12And, of course, their numbers will be essential in the Senate
02:14because the Coalition's not going to vote for this legislation.
02:16So Labor will need to get the Greens on side.
02:19On the other hand, though, the Coalition is concerned
02:22that this will actually hurt small businesses as well.
02:25So how much pressure is the government under
02:27over those particular consequences?
02:30Quite a bit because the business lobbies as well
02:32and the small business advocates have been making this point.
02:35350,000 small businesses, we understand,
02:38use discretionary trusts.
02:39That's one in every six.
02:40And while not all of those will necessarily be subject
02:43to this 30% minimum tax, it seems that some of them will.
02:47Now, Labor's offering some assistance, it says,
02:49to help people restructure their affairs.
02:51But Tim Wilson, the Shadow Treasurer, says,
02:53even restructuring can be expensive.
02:55It might require small businesses to refinance
02:57at an inconvenient time.
02:59More broadly, it imposes a cost on small business,
03:02whether they're paying this 30% tax
03:04or whether they're having to contort their affairs
03:06to avoid paying the 30% tax,
03:08whether they get government assistance or not.
03:10That's his line of argument
03:12and the Coalition's line of argument.
03:14The Coalition's votes won't be what decides
03:16whether this gets through the Senate or not.
03:18But that pressure that they're piling on Labor,
03:20it's clearly being felt, it seems, in the backbench,
03:22where there are some concerns being sort of backgrounded
03:26out to journalists about backbenchers,
03:28concerned about a growing perception
03:29about Labor being put at odds with small business.
03:32Again, it's a balance.
03:34It's being pulled in both directions.
03:35That's quite often how the Senate works.
03:37But on something that, as you say, is so technical,
03:39there's a ways to go on this yet.
