Opposition Leader Bill Shorten says a Labor plan to tax discretionary trusts would crack down on tax minimisation by high-wealth individuals.
The policy was unveiled at a New South Wales Labor Party conference yesterday.
Under the plan, there would be a minimum 30 per cent tax rate on distributions to people over age 18.
Mr Shorten has told the ABC it is about fairness and equality.
"I'd say to the Government, 'Don't throw bricks at this idea merely because we've found a loophole that we want to shut down.' And I think Mr (Malcolm) Turnbull and Mr (Tony) Morrison would have to explain, 'Why do they think it's okay for some Australians to be able to split their income?'"
Wealthy earners with discretionary trusts can distribute investment income to beneficiaries such as family members.
In splitting the income, trustees can direct it to beneficiaries on the lowest incomes who will pay the least tax, thereby reducing the overall amount of tax paid.
Labor's proposal would exempt disabled, charity, deceased-estate and, especially, farm trusts.
But 200,000 of the 300,000 trusts being targeted by Labor involve small-business owners.
The Australia Institute's Ben Oquist says there are not strong economic indications the tax is necessary.
"It's only the very wealthy who make the big use of trusts in Australia. My sense is it's being done for political reasons and there aren't strong economic reasons for excluding them."
The measure would be expected to raise more than $4 billion in revenue over the first four years and would take effect from July the 1st, 2019.
Opposition treasury spokesman Chris Bowen has told Sky News there will not be operational impacts on small businesses.
"So, to repeat, the only impact on small business, where any are affected, is if they're making payouts, distributions, to people who are uninvolved in the business, people not working in the business. So it doesn't affect the operation of the business. It only affects what the trust chooses to do with that money."
Former Liberal Treasurers Joe Hockey and Peter Costello proposed similar tax changes in their time but failed to convince their colleagues.
Now, the Liberals are calling it class warfare and a tax on success.
Prime Minister Malcolm Turnbull says Mr Shorten is running what he calls a "politics of envy" campaign.
"He wants to tear down anyone who's trying to have a go. He's obviously got a determination to do everything he can to kick small business in the guts. What does he think is going to drive economic growth, other than entrepreneurship and enterprise and small business? Every way you look at it, from raising taxes on small and medium businesses and family businesses, that's not the way to go. We're providing tax relief, because we know that will encourage people to invest and employ and get ahead."
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