Nationals Senator Bridget McKenzie has claimed the government may have to stump up millions of extra taxpayer dollars to fund the nation’s Olympic athletes due to consequences of its changes to discretionary trusts.
The Labor government plans to introduce a 30 percent minimum tax on the taxable income of discretionary trusts from July 1, 2028, aiming to limit income-splitting arrangements and bring the tax treatment of trust income closer to that of wage earners.
McKenzie’s concerns come because the Australian Olympic Foundation (AOF) uses a trust to generate income from its investments, which is then distributed to the Australian Olympic Committee (AOC) to support Olympic teams and athlete programs.
An AOC submission to the Treasury points to an estimated funding reduction of $2.5 million (US$1.5 million) a year, or $10 million for each Olympic cycle.
“The AOC is an income tax exempt entity,” McKenzie said told the Senate Economics Legislation Committee on Oct. 28.
“The foundation provides distributions from a non-exempt discretionary trust.
“The AOC’s submission to Treasury’s consultation on the minimum tax on discretionary trust raises concerns that Labor’s changes to taxes on trusts will significantly impact on the financial capability of the AOC.”
Katrina Di Marco, the Treasury’s deputy secretary international, corporate and investment, told the hearing that her department was aware of concerns, but could not comment on individual cases.
“We are continuing to work with stakeholders on a range of transition in implementation issues, and there will be further tranches of legislation,” she said.
“But we’re not in a position to comment on an individual taxpayer circumstances.”
McKenzie questioned how the lack of funding could affect Australia’s team at the 2028 Los Angeles Olympics.
“With less than two years till the Los Angeles Olympic Games, how does the government suggest the AOC recover the lost revenue, which is intended to support 550 Australian athletes we are sending to LA?” she said.
“They’ve put in a submission, but no one can tell me if they’ve met with them, if they’ve discussed their particular issues, if they’re assessing the recommendations that they put forward in their paper.”
Finance Minister Katy Gallagher said the government provides “enormous” support to athletes representing Australia via its sports portfolio.
“I don’t think it’s helpful for me to comment on individual entities and their arrangements, but I have no doubt that people … will be happy to engage on the specifics of how that will impact on the Australian Olympic Foundation,” she said.
McKenzie said she feared the burden would fall on taxpayers.
“We’re just going to end up having to pay through another portfolio,” she said.
