Coalition v ALP Tax Policies

The National Tax Agents Association (NTAA) has issued a decent side by side comparison of policy announcements by each party ahead of the impending election. Unless otherwise mentioned here are the ALP policies with any similar coalition policy

1. Limit tax deductions for tax (and some legal) expenses for individuals to $3,000 No coalition proposal.
2. Reduce the 50% CGT discount to 25% with exceptions for grandfathered investments. The coalition has no proposal to change CGT discounts.
3. Limit neg gearing to new housing and pre-existing investments. The coalition does not propose to change any rules.
4. Imputation Credit Refunds would cease for certain taxpayers. The coalition has no proposal.
5. 30% minimum tax rate for family trust distributions. The coalition does not propose any change to existing law.
6. Accelerated depreiation for business to immedaitely aloow a minimum 20% write off for eligible assets. The coalition proposes to retain the current small busienss $25,000 write off until 30 June 2020
7. Reduce the superannuation non-concessional annual cap to $75,000 from $100,000. The coalition does not propose any change to super caps.
8. Reduce the total super non-concessional cap for individuals under the three year bring forward rule to $225K from $300K. The coalition does not propose and change to caps.
9. Lower the Div 293 threshold from $200K from the present $250K. This will impose an additional 15% tax on people who have a remuneration package on the employer and salary sacrifice contributions. The coalition has no policy to change the threshold.
10. Repeal the new law which will allow people to make catch-up super contributions. The coalition has no plan to change the law already made. The bring forward rule will only assist those with balances under $500K.
11. Repeal existing tax law allowing ANY employee to make a tax deductible super contribution. The ALP would revert to the former 10%$ test preventing employees access to this deduction unless they make a salary sacrifice arrangement with a employer. The coalition supports the existing laws.
12. Prohibit SMSF limited recourse borrowing arrangements. The coalition does not seek to change existing laws

One proposed law change however may be a positive - For a employee but it will impact all employees who may lose real value of salary entitlements. And may impose higher employment costs on employers.

13. The ALP propose to end the freeze on the employer 9.5% Super Guarantee rate and fast track the rise to 12%. The coalition do not agree to the proposal as it is scheduled to commence increasing to 10% from 2022 and 12% by 2026 already. The start was deferred to avoid a unintended impact on small business. There has been significant concern the proposal may mean employees may forego future salary increase and only obtain a super increase and some may lose real salary value if they did not receive any increase as the employer may reduce their paid salary element.

Unlucky 13 for anyone with investments or a job.

The more the ALP promises the more committed they are to raising taxes.

 

I really hope that people understand and learn about each party's policies before voting. So many people I know "just vote labour" without understanding anything about any of the policies, because they believe labour are for the workers and "battlers". If labour get in it will have such a negative effect on our family.

 

Shameless tax grab to punish working people and self funded retirees and turn this country into a welfare state.

 

That happens on both sides , some are so blind they will continuously vote for the same party over and over again , regardless of bad behaviour and total arrogance.
Its the swinging voters that generally turf governments out.
There are probably many that voted in the current government at the last 2 previous elections that may be looking for change , and you know what , life still goes on .
Some people will probably feel it more that others, , especially those that have loaded themselves up with really high levels of debt with low yielding properties and still expecting property prices to keep on rising.

 

Great summary, gave the post a "like" , but massive "unlike" for the proposals.

 

14. ALP announces plan to terminate the superannuation first home buyer scheme. Coalition opposes this and claims so far that 17000 have used it.

 

So they should. It is a terrible policy that changes the purpose of superannuation. There was a first home savers offer but then the libs turfed it on coming in and it had 3x the number of users than this abomination of a policy (Murray, a rightwinger Liberal, thought as much in his review)

 

Great point , over time it would have been slowly watered down to include anyone.

 

1. “Lower the Div 293 threshold from $200K from the present $250K. This will impose an additional 15% tax on people who have a remuneration package on the employer and salary sacrifice contributions. The coalition has no policy to change the threshold.”

Have just been caught by this last week for the first time...when I called the ATO to get a better understand was advised all gross property related income counts towards hitting the threshold...seems a bit harsh when the net effect of my IPs is CF neutral after tax.

Interested to hear if others have hit the threshold due to IP income and any strategies / ways around it???

Thanks

 

Keep in mind that a reduction was done under the LIberal government from 300k to 250k. Labor plans on reducing it more; no one close to median wage is going to kick up a fuss on this ... it’s a top 1 or 5 percenterm if that.

 

1. Repeal existing tax law allowing ANY employee to make a tax deductible super contribution. The ALP would revert to the former 10%$ test preventing employees access to this deduction unless they make a salary sacrifice arrangement with a employer. The coalition supports the existing laws.

This is one where the laws should be changed so that companies cant reduce the super they pay if an employee chooses to salary sacrifice...the current approach is work around that is better than nothing.

 

So it's good policy because it doesn't personally affect you?

 

Major impacts for property investors are changes to CGT 50% discount and negative gearing.
If they are grandfathered then why are these changes unlucky to existing property investors?

 

What? It counts gross rent before deductions?

I thought all income tests only added back NET investment losses

 

Never said it was a good policy, nor that it was bad. just that the liberals cut it 50k and I doubt people whined about at the time...it’s like chicken little around here.

 

Yea me too that’s why I questioned it with the ATO and was advised that’s not the case!

 

Labor’s superannuation and related reform proposals

 

With the $250k threshold it just meant that there was no capacity to enter a salary sacrifice arrangement without paying extra tax. With a lower threshold it means employer contribution would be taxed at a higher rate, obviously depending on income.

The Liberal policy change wasn't great but this would be just gouging in my opinion.

 

Today the ALP indicated a stance that may work in taxpayers favour. ALP reference to the proposed non res cgt changes that will strip accrued exemptions after 30 June

“This process is just one of many instances where the Coalition has bungled housing policy,” Mr Leigh said.

So IF the law changes dont get approved by senate this week there is hope

 

Labor’s tax advice cap to limit SMSFs from fighting ATO