The debate around the federal government’s changes to trusts, negative gearing and Capital Gains Tax has people all fired up about broken promises, attacks on aspiration and asset protection.

But as a tax academic, and someone who utilises a discretionary trust, I support these changes as (mostly) in the nation’s best interest.

Yes, I will be adversely affected by the new rules, but teaching the ins and outs of taxation in my role at Bond University means I have an acute understanding of how broken Australia’s tax system really is.

I do not necessarily agree with all the changes, and I believe some do not go far enough, but it is important to debunk some of the agenda-driven information spreading across mainstream and social media.

Trusts and asset protection

Discretionary trusts are legal tax avoidance, I absolutely stand by that description.

There are legitimate cases for trusts, such as special disability trusts, but these are not affected by the changes, nor are unit trusts or listed trusts.

In unit trusts, ownership is divided into set units held by investors, similar to shares, with the trustee managing the underlying assets on their behalf. Unit trusts that trade units on the ASX are known as listed trusts. 

The government’s proposed changes target discretionary trusts, which differ in that beneficiaries do not have a fixed entitlement, such as owning say 10 per cent of the units, and the trustee has full discretion over who receives entitlements and how much.

Discretionary trusts are the only common........

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