Another of Labor’s major policies surrounds the taxation of distributions from discretionary trusts. Unlike the franking credits change, this policy has not received as much publicity but could have just as big an impact on small businesses.

Under this change, distributions from discretionary trust would be taxed at a minimum of 30%. This would impact many businesses and investment trusts who currently utilise the rules to distribute income to family members at lower tax rates. In effect, trusts would have their income taxed at the same rate as companies. Many measures over the last years including this one can be seen as a move to make discretionary trusts a less attractive structure than companies.

Another hidden policy change which could also cause grief for small businesses is the proposed $3,000 cap on deductions for tax advice. Under this proposal, individuals, trusts, SMSFs and partnerships would only be allowed to claim a maximum of $3,000 for accounting fees. Companies are excluded from this policy but there are fears this could prevent many taxpayers from seeking and getting appropriate tax advice due to this cap regarding complex tax matters.