Of trust and trusts

Cryptos and ETFs appear to be the favoured avenues, but now not only will these forms of savings have their capital gains clipped by the top marginal rate of the would-be homeowner, but they will be taxed at a minimum of 30%, even if the taxpayers’ personal rate is lower than that.

As a policy meant to help first home buyers it doesn’t make any sense, but it does make sense in other ways, and that 30% minimum is the key to it.

So let’s look at another change to tax laws which will make little difference to many young Australians but will to others who are wanting to legitimately share income, limit liability, protect the beneficiaries of their estate or go into business with other parties. That is the imposition of a 30% tax on trusts.

There is a fundamental problem here in that it misunderstands the whole purpose of a trust which isn’t to hold assets for yourself as the trustee, it is to hold assets on behalf of someone else who is entitled to them.

On this principle trusts have been expected to distribute all their income each year to the beneficiaries who then deal with the tax on that at their own rates. If the income isn’t distributed, and only then, is it taxed at the company rate of 30%.

The elements of separation, and fiduciary duty to a beneficiary, are abrogated by this tax change. It’s as though the government doesn’t understand the concept of holding something on behalf of someone else and owing that person a duty to be careful with it.

And of course they don’t. When they get less tax than they think they might have been able to get away with, such as when there is a discount on the rate paid on capital, they label it as a “cost” to the budget, as though they are giving you something of theirs, rather than just not having, by design, the right to collect it.

In Labor’s mind taxpayers retaining as much of their income as they have a right to is an affront to the politicians’ right to spend as much as they want.

Narcissism is  a mental condition where the narcissist does not see the boundaries between themselves and the world. It’s not that they exploit other people, it’s that they don’t see them as being anything but an extension of themselves.

The treasurer is short of income for his grand designs, so instead of recognising the boundaries imposed on him by the reality of the available tax pool, he just grabs more on whatever justification he can make.

This is a form of political narcissism, and as with any narcissism, when we, the subjects of it, work it out, we see it as a breach of our trust.

The COVID policies were also narcissistic, with governments full of Karens enforcing their phobias on everyone by mostly left wing governments.