Практика Shadowing: Why is everyone talking about an Australian 'death tax'? | The Daily Aus - Изучайте разговорный английский по видео

Good morning and welcome to The Daily Oz.

It's Thursday the 28th of May.

I'm Zahra Seidler.

I'm Elliot Laurie.

There's a common saying that nothing is certain in life except for death and taxes.

And so today I wanted to combine those two topics because why not?

And let's talk about a death tax.

That's right, we have heard the term death tax in the news headlines over the past few weeks

and you might be a bit confused.

Death tax.

Could be reversed with the Prime Minister considering a carve-out of his CGT changes for trusts.

In today's podcast, we're going to explain what the latest trust changes involved in this month's budget actually mean for everyday Australians.

Zara, it was two weeks ago when you and I were stuck here at TDA headquarters, poring over the budget, trying to work out what was going on.

How could we forget?

Fueled by marvellous creations.

Yeah, which you were really into, but you got the caramel flavour, which I was not that into.

Okay, sorry, Sam did that.

That wasn't me.

Anyway, we digress.

Anyway.

We needed fuel.

Not what we're talking about today.

We are talking about the budget again, even though it's been two weeks since all those details were announced.

And that's because there's been this ongoing conversation about a death tax, which the coalition has been alleging was sort of buried in the budget.

And it definitely didn't come up when we were looking at it two weeks ago.

I think a good place for us to start is with a bit of a refresher on what a trust is, because that's what this is all about, right?

Yeah, exactly.

It's so funny.

I don't think that a budget has ever had a longer tail.

Like, we are talking about something entirely new this week, which it feels like for a pretty rudimentary black and white document,

the fact that there is still stuff coming up is saying a lot.

But yes, what has emerged is this discussion about a death tax.

And that's because of changes that was proposed by the government in their budget to trust.

So put simply, a trust is a legal structure where money or assets are held on behalf of someone else.

I think popular culture has very much made trust fund babies a thing.

Yes, that's what I was thinking of, rich kids.

Yeah, which is basically that in that case, your parents have set up a trust and they are dispersing money through that vehicle for future generations.

There are tax implications for that.

And it's certainly a more favorable tax situation for people to find themselves in they lower the tax

that they're paying at that time.

So that's why it's usually held and, you know, a whole bunch of other reasons.

I'm going to pause because our producer, Aula, has a hand up.

We've been wanting her.

We got her a microphone and now we are welcoming her to the pod.

The moment has come where I have a question.

Yay!

What is it?

It might be a stupid question.

No. We wrote a whole book about this, Aula.

It's called No Silly Questions.

You should buy it, guys.

Aula hasn't read it.

Aula joined after, so we will make it a thing that she has to read it.

Yes what's the difference between a trust and a will great question

so a trust is a will is that you leave money for certain people

and that's like if someone were to die

and they leave a will for their living surviving family with what they are leaving for them that's a will

so you leave the house

or you leave whatever's in your bank account your car whatever assets you have you have to portion up

and so usually when you have children you'd make a will or if you have assets if you buy a house

kudos to you then you get to um assign

that to whoever a trust firstly when you're living

that is being used so if you set up a company

and you are getting money through that company you can start giving allocating

that to your children while you're still living but interestingly i think probably because of the death thing,

there is a distinction between a trust that is used

when you're alive and a trust that is used when you're no longer alive.

And that's actually literally the crux of what we're talking about today.

So amazing contribution, Ola.

Thank you.

That was a great debut for Ola on the mic.

It was.

Amazing.

More of that, please.

And so just to give you a sense of how often people are using trusts, one million active trusts exist in Australia.

Oh, wow.

Is that shocking to you?

Yeah, it is.

I feel like it would be one of those ones where it's like the top, top 1%, but obviously it's more common.

Yeah.

So one million trusts in use in Australia, and the government announced changes to how those trusts are going to work.

So at the moment, there's no minimum tax rate on trusts.

But under changes announced by the government, distributions from family trusts will be taxed at a minimum rate

of 30% rather than at whoever was getting its personal income tax rate.

Okay, interesting. So previously...

Does that make sense?

Yeah, previously it was determined by how much income that person was already getting in a certain financial year.

Now it's going to be at a bare minimum 30%.

Yeah, exactly.

So previously it was at your tax rate and now, you know, one way that people were trying to find workarounds for tax was that they were allocating it to,

say, 18-year-olds who didn't have an income at that point

and then they were paying no tax because they didn't have an income and no tax to thus pay.

Yes, got it.

And that was a very long way of explaining it.

But now there's that 30% minimum for anyone who is benefiting from that trust.

Okay, and I'm assuming that was to try to clamp down on people who were using it as a workaround.

Yeah, the idea is, and I guess this is the entire flavour of the government's agenda here, which is they want to create intergenerational equity.

They want to level the playing field for people so that things can't be used by, as you said, the top 1% to further their wealth,

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but that more wealth is accessible to more Australians.

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So that's the sort of playing field that we're dealing with right now.

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You mentioned that it's being called a death tax, which is the part that's kind of tripping me up a little bit.

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Like, what is this dramatic name?

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Is that what was in the budget?

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No, that wasn't what was in the budget.

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I don't think the government would have ever called it that.

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So the reason that this name has arisen is because these changes also apply to something called a testamentary trust.

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My favourite kind.

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Yeah, this thing that we've all heard heaps about before.

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Basically, a testamentary trust is used to distribute a person's assets after they die.

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Hence, Ola's excellently timed question.

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And it can remain in place and include lots of generations.

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So what I think I need to establish before we talk about how this term has come about is

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that we're not talking here about being taxed when the person dies.

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We're talking about still just when that money is dispersed to the beneficiaries.

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And so one is called an inheritance tax.

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And that's like basically when you inherit the assets, then you're taxed.

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We don't have that in Australia.

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Nobody is proposing that.

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What the government is proposing is that these types of trusts

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that apply when people die and live on when they have passed,

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that those will attract the same 30% minimum as the other types of trusts that we were talking about earlier.

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Okay.

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Interesting.

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Yeah.

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And so under Labor's proposal, these changes, like the other changes we've heard about, negative gearing, CGT, they'll be grandfathered,

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meaning they will only apply to new trusts, not to existing trusts. Is this on?

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It's Billy from TDA, and we are wondering if you can hit subscribe to help this channel grow.

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Now, back to the video.

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Okay, so just to be clear, this isn't officially called a death tax.

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No, that term came from The Australian.

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So that's News Corp's big paper.

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They first reported that the government had introduced this very sly death tax

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and then the coalition obviously in opposition kind of took it

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and ran with it it's not the first time we've heard

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this sort of language i think that's why people who would

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have read this would have been like i swear i've heard

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this before in 2019 the coalition ran a campaign saying

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that labor was going to introduce a death tax at

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that point there were no changes being announced there was nothing to do with trusts.

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There was nothing to do with inheritance tax.

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But that campaign really stuck.

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I think when people hear death tax, they freak out that all of their assets, when they pass, are going to go to the government.

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But that's not what happened in 2019.

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And I guess the government has been trying to make a very clear point that they don't think that's what's happening now.

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Okay.

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So then what What would be the motivation for the coalition calling it a death tax and the Australian

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bringing this term into sort of the public consciousness?

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Well, I guess it's an evocative way to talk about quite rudimentary changes to trusts.

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Like we said, trusts aren't something that we're necessarily talking about, thinking about unless you're the beneficiary of one.

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And so we've had the coalition suggest that Labor buried this, that this was something that, you know, because there was such big changes

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that this was like one small line in their budget and that they were trying to keep it on the down low.

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We've seen the coalition launch a petition against the changes, saying again that they were hidden.

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And this time they've labelled Labor's trust change a 30% inheritance tax, so that goes to the 30%,

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targeting popular family trust structures used by everyday Australians to save, invest and pass on assets to their children.

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I was reading Shadow Treasurer Tim Wilson's press release about this

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because the coalition have been going very hard on him he

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said the albanese government has hidden a 30 death tax easter egg in their bad faith budget

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and was hoping they could sneak their assault on family savings

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past australians i do have to add his press release then

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went on to explain what an easter egg was it says an easter egg in popular culture is a secret

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that was deliberately hidden

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and requires effort to find i don't think he knows not taylor swift fans in tim wilson's office

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if and they think we need that explained.

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But I guess that gives you a sense of how the coalition is framing it, which is I think that this is very evocative language that Australians resonate with.

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They've seen it work in 2019 when they ran this sort of campaign then.

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Obviously, the coalition won that campaign.

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They won that election.

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And here they're suggesting that we could be facing a death tax yet again.

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Yeah.

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I don't think Tim Wilson knows what an Easter egg is.

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I think it's meant to be something joyous or exciting

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or something like a little yeah like a little treat

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that you find buried in there yeah not something

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that they're alleging is going to negatively affect a lot of

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Australians you also mentioned in one of those quotes there

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that it's a really popular solution for they said a lot

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of Australians how popular is it like how many people are

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accessing these kind of trusts the testamentary one sorry I just had to remember how to pronounce

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that word um that one is not as popular as all trusts, obviously.

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So according to ATO data, there are around 10,500 of these types of trusts.

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So it's about 0.1% of taxpayers.

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Yeah, tiny percentage of the population when you put it into perspective like that.

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Yeah, it is.

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But again, the broader idea of a tax vehicle being used is much more popular and is being used far more widely.

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Okay, so we've heard what the coalition has to say about this.

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What has the government actually said about the death tax?

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Well, I mean, they've been at great pains to try and deconstruct that sort of language and suggest that, no, that's not what they're trying to do.

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Again, they're saying this is not a tax on inheritance.

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This is just a tax in the same way anything else in a trust is taxed.

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They have, however, hinted to some newspapers, we saw in the Sydney Morning Herald, that they could be considering reversing this policy for testamentary trusts.

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It's unclear, and certainly this hasn't been confirmed by the government, it's unclear if the campaign is just getting very loud

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and they want to stop it or if through consultation they've realised

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that this isn't the policy that needs to affect all trusts.

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So what we do know is that they are pushing ahead with the CGT and negative gearing legislation first.

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So that's happening, I think, as soon as this week.

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And the trust legislation will be separate and that will come later.

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So they'll have a bit more time to play around with what's actually included in this legislation

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and whether these testamentary trusts that have attracted the label of, you know, a death tax will actually be made into law.

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Because right now, it's just a proposed change.

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Yeah, that's because everything in the budget is kind of just an idea

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or a proposal and then it does need to still go through the traditional legislative process.

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Exactly and I mean I guess we can get a pretty good indication from what we've heard from the coalition

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that they wouldn't necessarily support the trust changes.

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We do know that the government does need either the coalition

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or some of the crossbench to support them in order for legislation to pass the upper house

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so that could be another reason I guess

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that perhaps they know they need the numbers

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but the prime minister's office didn't confirm those reports to us they told tda

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that the budget measures would just be introduced as legislation

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and basically said you wait

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and you see no special information for you okay no spoilers from the government no easter eggs

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that was so boomer of me um

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but yeah look i think it's a really interesting topic more

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so i think

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when you think about how language is used in politics certainly

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this was never referred to in the budget papers as a death tax

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or an inheritance tax

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and i think it's interesting to to understand how language can

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be used in heightened environments where where people are already feeling

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sensitive about you know the budget some people agree with it others disagree with it

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and this language appears to be cutting through so much

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so i guess that we're talking about it today

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and people have asked us today we can explain it yeah

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great branding exercise from the coalition we'll have to take notes zara thank you

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so much for explaining that to us thank you Thank you, Elliot.

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I believe it's time for the titbit.

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I'm looking expectantly at you, hoping you have one because I completely forgot to come with one today.

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Zara, you're lucky that we've been working together long enough that I know you.

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Yeah, so much so that you called me your grandmother the other day.

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Let the record reflect. But anyway.

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But also I know that my grandmother is sometimes forgetful of these things, so I did come prepared with a titbit.

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Alright, hit me.

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What is it?

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about a share house in Esperance in WA where they went to make steak

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and salad for dinner and one of the housemates has gone

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and opened up the lettuce and there's a fully live frog in the top of it.

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So this is just a regular bag of lettuce that they got from Woolies.

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It's so funny.

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There's a video of it that they posted online.

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The reason that this story is so interesting is it got such crazy international media attention.

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The Associated Press actually picked it up and interviewed these people in WA.

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It's so distinctly Australian.

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It's so distinctly Australian.

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And the bit that I loved in it was one of the housemates said, oh, I thought he was taking the mick when he said there was a frog in the lettuce,

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but AP had to include a translation about what that means.

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Oh my God, I love it.

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Can I just say in my old apartment, I was trying to find something under my bed.

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I dropped like a bobby pin under my bed and I like reached out and I saw something move.

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And I was like, oh, what's that?

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A full frog.

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A full frog in Sydney in the middle of the day

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and just ribbit ribbit ribbit its way out and I freaked out

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and screamed and ran to the other side of the apartment.

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Really?

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That's so chill.

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Okay, I was not expecting to see a frog under my bed.

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Like what else is there?

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That's like a messed up fairy tale.

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It's like Princess and the Pig.

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But like not fun.

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Anyway, so I resonate deeply with these people, but they sound way more fun and chill about it than I was.

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They were super chill.

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They even got to the point that they politely escorted the frog out to a pond nearby.

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That's a much better person than I am.

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They gave it a send-off by playing Crazy Frog as it hopped into the pond.

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And on that note, we are going to give you a send-off by playing Crazy Frog.

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And that's all we have time for today.

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Enjoy the dulcet tones of Crazy Frog, and we'll see you later today.

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Практика Shadowing: Why is everyone talking about an Australian 'death tax'? | The Daily Aus - Изучайте разговорный английский по видео

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