Income Tax Reforms

Key ALP Tax Policies

Comparable Coalition Tax Policies

1.Restrict deductions on personal tax-related expenses to a $3,000 cap per individual, per year

Ref: Shadow and Assistant Shadow Treasurer’s joint media release, 13 May 2018

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 ‘I’ returns

2. 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

Ref. ‘A fair go for Australia, paragraph 135 and ALP website: Labor factsheet, ‘Positive plan to help housing affordability’

The Coalition has not indicated a desire to change the maximum general CGT discount from 50% for eligible taxpayers.

3. 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.

Ref: ‘A fair go for Australia, paragraph 135 and ALP website: Labor factsheet, ‘Positive plan to help housing affordability’

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

4. Remove the ability for certain taxpayers to claim excess imputation credits as cash refunds

Ref: Leader of the Opposition’s media release, 13 March 2018

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. 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)

Ref: ‘A fair go for Australia, paragraph 131 and Leader of the Opposition’s media release, 30 July 2017

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 tax rate

6. 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

Ref: Shadow Treasurer’s media release, 73 March 2078

The Coalition has announced that 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 (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’) cap to $75,000 (down from the current $100,000)

Ref: ‘A fair go for Australia, paragraph 41

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 (down from the current $250,000)

Ref: ‘A fair go for Australia’. Paragraph 41

The Coalition has not indicated a desire to change the current $250,000 Division 293 tax threshold

3. Repeal the newly introduced concessional contributions (‘CCs’) catch-up rules

Ref: ‘A fair go for Australia, paragraph 41

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. Repeal   the    recent   reforms  allowing
all eligible individuals to claim a tax deduction for personal superannuation contributions

Ref: ‘A fair go for Australia, paragraph 41

Retain the recently legislated relaxation of the personal superannuation deduction rules (i.e., the removal of the ‘10% test’ from 1 July 2017)

5. Prospectively restore the prohibition on direct borrowing by SMSFs on housing investments via Limited Recourse

Borrowing Arrangements (‘LRBAs’)

Ref: ‘A fair go for Australia, paragraph 136

The Coalition has not indicated a desire to change the current LRBA rules

6. 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.
Ref: ‘A fair go for Australia, paragraph 39

The Coalition has not indicated a desire change the current 9.5% Superannuation Guarantee rate until the first increase in 2022 (to 10%) begins the gradual progression to 12% by 2026.