Source : the age
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By any measure, federal parliamentarians are different from the rest of the population.
Their starting income of $233,643 puts every one of them in the top 5 per cent of all wage earners. They are more likely to own their home and far less likely than the general population to rent a property.
And they use a key financial instrument – trusts – much more than the people they represent.
An analysis conducted by this masthead of the register of members’ interests found that of the House of Representatives’ 151 members, 41 of them – almost 30 per cent – have declared holding at least one trust. Fifty of them have a trust that is either held jointly with their partner or is in their partner’s name or for a child.
Our interactive, which brings the contents of the register into one searchable engine, shows 19 of the 76 senators in the upper house – or a quarter – have a trust while three have a trust with their partner or in their partner’s name.
Trusts, created in 13th-century Britain partly to avoid paying taxes to the local lord or king, are tax entities that hold assets on behalf of their beneficiaries. The assets earn income, and the person in charge of the trust, the trustee, determines how much of that income flows to the beneficiaries.
They are increasingly popular as people use them to protect assets or to arrange their tax affairs.
There were almost 1 million trusts in 2021-22, with the number increasing by 58,000 over the previous two years.
According to the federal Treasury, around 1.8 million individuals, or 12 per cent of people who lodged a tax return in 2021-22, declared net income from a trust.
According to the register of pecuniary interests, the LNP’s member for Dawson, Andrew Willcox, has the largest array of trusts of any MP in the parliament.
Willcox, a third-generation tomato grower who has also been the mayor of the Whitsundays, has 17 separate trusts which he shares with his wife Raylene.
While farmers, especially those whose family have long associations with the land, often use trusts for financial management, inheritance and tax purposes, 17 is a large number.
Labor MP for the Victorian seat of Corangamite, Libby Coker, has the next largest number of trusts at seven. This includes at least one used as a personal superannuation fund, which many parliamentarians use.
Neither Willcox nor Coker replied to requests for comment.
Coker is just one of several Labor MPs to have trusts. They include Melbourne-based Tim Watts, Perth-based Patrick Gorman, and frontbencher Amanda Rishworth, while the partner of Canberra backbencher David Smith holds three trusts that cover farming and venture capital.
But the majority of trusts are held by the Coalition, with a particularly large number among Queensland-based MPs.
Apart from Willcox, Queensland Coalition members with trusts include Ross Vasta (one personal trust, while his partner has two), Andrew Wallace (four trusts), Colin Boyce (one for a cattle grazing business, another that includes earthmoving operations), Bert Van Manen (two trusts) and Terry Young (two trusts, plus a separate one linked to his partner).
Teal independents are also among those MPs to have trusts. Sophie Scamps and Allegra Spender, both in Sydney, have trusts, while the children of Perth-based Kate Chaney have their own trust.
Partners and children feature prominently among many MPs’ trusts. Peter Dutton’s wife Kirilly and their children are credited with control of a trust, Barnaby Joyce declares a single trust that is in the name of his son Sebastian, while the wife of Deputy Prime Minister Richard Marles has a trust in her name but not that of her husband.
In the Senate, independent David Pocock is one of many senators to declare family trusts. Others include Liberal Dave Sharma, Greens’ representative Steph Hodgins-May and Tasmanian Liberal Richard Colbeck.
While family trusts are the dominant form held by MPs, many acknowledge their trusts are used for real estate or share investment. These include Liberal frontbencher Michaelia Cash, Communications Minister Michelle Rowland and Labor backbencher Meryl Swanson, whose trust operates an agistment business.
While accountants and tax experts have long defended the use of trusts, they are also used to reduce taxable income.
Research by academics at the Australian National University and Sydney University, based on 189 million tax records collected between 2000 and 2018, last year revealed the way trusts were used by people to “bunch” just below changes in tax thresholds.
The researchers found that ordinary wage and salary earners were unlikely to bunch around the major changes in the tax system – where the tax-free threshold ended or where the then 19 per cent, 32.5 per cent, 37 per cent and 45 per cent tax rates started.
But there were large numbers of self-employed people who drew income from family trusts at those change points, with far more people just below the new rate than there should be.
Just below the $180,000 threshold, where the 45 per cent tax rate started, the researchers found self-employed people with a spouse and children who drew income from a trust were 50 times more likely to be present than if there was no change in the tax rate.
The Resolve Political Monitor, conducted for this masthead by research company Resolve Strategic last year, found 39 per cent of respondents believed tax concessions on trusts should be reduced, with 22 per cent opposed. Another 39 per cent were unsure.
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