Minor Income for 2011-12

Tax free threshold for a Minor has decreased from $2666 to nil.

The Government will remove the ability for minors (children under 18 years of age) to access the
low income tax offset (LITO) to reduce tax payable on their unearned income, such as dividends,
interest, rent, royalties and trust distributions, with effect from 1 July 2011. Income earned by
minors through employment will still be eligible for the full benefit of the LITO. Unearned income
of minors who are orphans or disabled, as well as compensation payments and inheritances received
by minors, will not be affected by this measure.

This measure significantly reduces the potential income tax benefit of parents investing in their
children’s names, and of making family trust distributions to minors. Given that many small and
family businesses are operated within a trust structure, this measure could be expected to adversely
affect such businesses by effectively increasing tax payable on business profits.