Cracking down on a tactic used by wealthy Australians to minimise the tax they pay would give a Labor government an extra $7.7 billion in revenue to spend over the next three years.
The opposition revealed in 2017 it would address “income splitting” through discretionary trusts, a practice which allows people to allocate some of their wealth to household members in lower tax brackets.
Labor plans to introduce a new standard minimum rate of 30 per cent on discretionary trusts for anyone over the age of 18.
According to a new costing by the Parliamentary Budget Office, that will claw back $7.69 billion worth of revenue over the next three years and $26.9 billion over the next decade.
Shadow treasurer Chris Bowen says that money would otherwise be in the pockets of wealthy Australians.
“This reflects the two-class system we currently have in Australia and the Liberals endorse,” he said in a statement on Thursday.
“First class where the wealthy can afford lawyers and accountants to use tax deductions and loopholes to reduce their taxable income right down, and then there’s economy class for PAYG earners who can’t access these loopholes.”
Labor on Wednesday jumped on recent tax office data in an effort to ramp up support for another of its proposed changes to how people manage their tax affairs.
The data showed 69 people earning more than $1 million in a single year were able to pay no tax in 2016/17, 27 of whom claimed an average of $607,000 to manage their tax affairs.
If it wins government on May 18, Labor would limit how much people can claim for managing their taxes to $3000.