tax policy

Snapshot of the ALP Key Tax Policies

Snapshot of the ALP Key Tax Policies

Snapshot Of The ALP Key Tax Policies (Compared To Coalition Tax Policies)
The table below outlines some of the key ALP tax policies of interest.

Income Tax Reforms
 Key ALP Tax Policies  Comparable Coalition Tax Policies

1. Personal Tax-Related Expenses

Restrict deductions on personal tax-related expenses to a $3,000 cap per individual, per year. No cap on personal tax-related expenses is proposed, although the ATO has made adjustments to Item D10-Managing Tax Affairs to obtain a more detailed breakdown of what is being claimed by taxpayers at this label from the 2018 Individual returns.

2. General CGT Discount

Reduce the maximum general CGT discount from 50% to 25%, with exceptions for:

  • grandfathered investments;
  • investments made by superannuation funds (which are effectively taxed at 10% after the CGT discount; and
  • Assets of small business owners.
The Coalition has not indicated a desire to change the maximum general CGT discount from   50% for eligible taxpayers.

3. Limit Negative Gearing

Limit negative gearing to investments in new housing, with grandfathering for pre-existing investments. Labor has proposed any losses from new investments in shares and existing properties (which we assume includes commercial property) will still be permitted to be used to offset investment income tax liabilities (but not against salary and wages).

Any deferred losses can then be carried forward to offset the final capital gain on the investment.

The Coalition has not indicated a desire to change the current negative gearing rules.

4. Excess Imputation Credits

Remove the ability for certain taxpayers to claim excess imputation credits as cash refunds. The Coalition has not indicated a desire to change the current ability for eligible taxpayers (including individuals and SMSFs) to receive cash refunds for excess imputation credits.

5. Distributions From Discretionary Trust

Apply a minimum tax rate of 30% to all distributions from discretionary trusts (non-fixed trusts) to mature individual beneficiaries (i.e., those over 18). The Coalition has not indicated a desire to change the current rules in relation to the taxation of discretionary trust beneficiaries at their applicable marginal rate.

6. Australian Investment Guarantee

Introduction of an Australian Investment Guarantee from 1 July 2020.This accelerated depreciation for business proposes to immediately allow a 20% write-off for eligible depreciating assets. The Coalition has announced that from 29 January 2019, the instant asset write-off threshold for SBE taxpayers will increase to $25,000 and this will apply until 30 June 2020 at which time the immediate write-off threshold presumably goes back to less than $1,000).

 

 Superannuation Reforms
 Key ALP Tax Policies  Comparable Coalition Tax Policies

1. Lower The Non-concessional Contributions (NCCs)

Lower the non-concessional contributions (NCCs) cap to $75,000 (down from the current   $100,000). The Coalition has not indicated a desire to change the current $100,000 NCCs cap (indexed).

2. Lower The Division 293 Tax Threshold to $200,000

Lower the Division 293 tax threshold to $200,000 (down from the current $250,000). The Coalition has not indicated a desire to change the current $250,000 division 293 tax threshold.

3. Concessional Contributions

Repeal the newly introduced concessional contributions (CCs) catch-up rule. Retain the new CCs five-year catch-up rules for eligible members if they have a total superannuation balance of less than $500,000.

4. Tax Deduction For Personal Superannuation Contribution

Repeal the recent reforms allowing all eligible individuals to claim a tax deduction for personal superannuation contributions. Retain the recently legislated relaxation of the personal superannuation deduction rules (i.e., the removal of the 10% test from 1 July 2017)

5. Restore The Prohibition On Direct Borrowing

Prospectively restore the prohibition on direct borrowing by SMSFs on housing investments via Limited Resource Borrowing Arrangements (LRBAs). The Coalition has not indicated a desire to change the current LRBAs rules.

6. End The Freezing Of The Superannuation Guarantee Rate at 9.5%

End the freezing of the Superannuation Guarantee rate at 9.5% and fast track the employer compulsory contribution percentage to 12% – although firm dates have not been provided. The Coalition has not indicated a desire to change the current 9.5% Superannuation Guarantee rate until the first increase in 2022 (to 10%) begins the gradual progression to 12% by 2026.

Source: NTAA – Voice Edition No.288 Jan/Feb 2019