Income Tax Reforms and Superannuation Reforms
The Federal Election will be the primary focus over the next few months, with many commentators predicting a possible change in Government. As usual, tax policy is a focal point of the political debate. The table below outlines some of the key ALP Tax Policies of interest and compares them to the Coalition Tax Policies. For an analysis of what the headline reforms mean, please refer to Peter Caunt’s article – Labor Party Policies For 2019 Federal Election.
| Income Tax Policies | |
|---|---|
| Key ALP Tax Policies | Comparable Coalition Tax Policies |
| 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 |
| Reduce the maximum general CGT discount from 50% to 25% | No change to the maximum general CGT discount from 50% for eligible taxpayers |
| Limit negative gearing to investments in new housing, with grandfathering for pre-existing investments. | No change to the current negative gearing rules |
| Remove the ability for certain taxpayers to claim excess imputation credits as cash refunds | No change to the current ability for eligible taxpayers (including individuals and SMSFs) to receive cash refunds for excess imputation credits |
| Apply a minimum tax rate of 30% to all distributions from discretionary trusts (non-fixed trusts) to mature individual beneficiaries | No change to the current rules in relation to the taxation of discretionary trust beneficiaries at their applicable marginal tax rate |
| Introduction of an Australian Investment Guarantee from 1 July 2020 | From 29 January 2019, the instant asset write-off threshold for SBE taxpayers will increase to less than $25,000 and this will apply until 30 June 2020 |
| Superannuation Reforms | |
| Key ALP Tax Policies | Comparable Coalition Tax Policies |
| Lower the non-concessional contributions (‘NCCs’) cap to $75,000 (down from the current $100,000) | No change to the current $100,000 NCCs cap (indexed) |
| Lower the Division 293 tax threshold to $200,000 (down from the current $250,000) | No change to the current $250,000 Division 293 tax threshold |
| Repeal the newly introduced concessional contributions (‘CCs’) catch-up rules | Retain the new CCs five-year catch-up rules for eligible members if they have a total superannuation balance of less than $500,000 |
| 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) |
| Borrowing by SMSFs to be prohibited | No change to the current LRBA rules |
| End the freezing of the Superannuation Guarantee rate at 9.5% and fast track the employer compulsory contribution percentage to 12% | No change to the current 9.5% Superannuation Guarantee rate until the first increase in 2022 (to 10%) begins the gradual progression to 12% by 2026 |
