Two thirds of the discretionary trusts hit by Labor's proposed taxation crackdown belong to families running small businesses, but Opposition Leader Bill Shorten insists they are not being targeted.
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Mr Shorten conceded about 200,000 of the 315,000 trusts that would be whacked with a minimum 30 per cent tax on discretionary payments to trustees were related to small businesses - although he questioned whether many of these were "active" businesses or high net worth individuals such as barristers.
The Labor leader said it was "a very small number" of Australia's three million small businesses, despite accounting for almost two thirds of the trusts estimated to be affected by the policy.
"They'll be a portion of it, we suspect around 200,000 of about three million small businesses. I do think that qualifies as a small number," Mr Shorten told ABC News 24 on Monday.
"It's not about small business, it's about high net worth individuals."
Mr Shorten said the policy, announced on Sunday, would prevent "income splitting" whereby high-income earners shuffle money to family members on lower incomes and tax rates, such as adult children at university.
The Council of Small Business Australia, despite opposing Labor's move, agreed income splitting was a problem, with some business owners seeking to "deliberately rort the system".
The council's chief executive, Peter Strong, said Labor's proposal "doesn't affect that many people" but those doing the wrong thing should be dealt with "in another way".
"Don't punish everybody," he said.
Labor estimates the crackdown would net $17.2 billion for the budget bottom line over 10 years, by imposing a minimum 30 per cent tax rate on distributions - which is lower than the top marginal tax rate of 47 per cent.
Treasurer Scott Morrison quickly branded the policy a "direct assault" on small businesses and the product of class envy. "If your family runs a small business and you have a family trust, Bill Shorten thinks you're the problem, that you're dodgy," he said.
But Prime Minister Malcolm Turnbull was less critical on Monday, saying only that the proposal lacked detail and would not create jobs.
At the weekend, shadow treasurer Chris Bowen declined to say how many small businesses would be hit by the policy change. But conceding the 200,000 figure on Monday, Mr Shorten argued "many of these self-classifying discretionary trusts will not be active small businesses – rather they'll be barristers, investment bankers who are income splitting" to other members of their families.
"The vast bulk of small businesses are not benefiting from this," he told ABC Radio National.
He described the practice of income splitting as "a bit of a racket" that had recently become more prevalent.
"We're cleaning up an anomaly," Mr Shorten said. "There's been an explosion in this particular technical loophole in recent years."