TAX NEWS - JUNE 2010

Australia Tax: Mundine fights back against native title tax

The Rudd government has been accused of trying to rob the nation's poorest people after refusing to rule out introducing a four per cent tax on native title compensation payments.

Former Labor Party president Warren Mundine, now chief executive of NSW Native Title Services, said the government must rule out the option of taxing native title payments.

"We believe this area should be exempt. We believe that they should only be looking at the tax- exempt options and we will bring back our documentation to prove that they should be," he said.

Assistant Treasurer Nick Sherry said the national consultation process on the tax treatment of native title announced last month was wide-ranging to make sure all options were considered.

"There are no pre-determined policy outcomes -- that's why we're conducting a consultation. Our goal is to make sure taxation laws . . . work in the best interests of native title holders and indigenous economic development."

In a paper released for discussion, Canberra has floated three ways to allow Aboriginal communities, who receive native title funds, to keep more money and use it to benefit the entire community.

One plan involves a blanket tax exemption for native title payments. Another involves the creation of a new tax-exempt entity, an indigenous community fund, to deal with the taxation of benefits when they are used for a range of defined purposes.

The third option is for the native title withholding tax announced in 1998, but not implemented, which allows the government to withhold an amount of tax before the payment goes to the native title holders. The rest of the payment would then be income-tax exempt.

Kimberley Land Council executive director Wayne Bergmann also said it was outrageous that Canberra was even considering taxing native title payments.