With the upcoming election looming, our affiliated financial planning firm, Barns Financial Services, provide an overview of the different reform changes impacting Taxation and Superannuation from both sides of politics.
Federal Election Analysis
For some voters, the decision on where they cast their vote will be influenced by where the future elected Government will focus their spending. In this respect, both sides of politics have made announcements for spending on defence, education, welfare, health, transport and infrastructure. Often expenditure in these areas will not show an immediate benefit to individuals, but can form the basis for longer term changes.
For many however, reform or changes to areas such as taxation or superannuation have a more immediate impact because of their ability to influence shorter term actions. To help provide you with an overview of the differences (or in some cases consistency) in positions, the following is a comparison of the more significant positions proposed by both sides of politics, drawn from announcements during both Budget week itself, and at other times as both sides have positioned themselves towards the upcoming election.
| Tax Policy Area | Coalition | Australian Labor Party |
| Negative Gearing | Deductible against individuals salary and wages | Limit negative gearing with grandfather for pre-1 January 2020.
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| Capital Gains Tax | A 50% discount when assets are held for greater than 12 months | Assets that are acquired after 1 January 2020 and have been held for greater than 12 months will be eligible for a 25% CGT discount for individuals and trusts. Assets acquired prior to 1 January 2020 will receive the 50% discount. |
| Removal of imputation credit refund | Excess imputation credits are fully refundable | From 1 July 2019 excess imputation credits will no longer be refundable, they will only be able to be used to reduce tax payable. Pensioners will still be able to benefit from cash refunds. |
| Cost of managing tax affairs | The cost of managing tax affairs are fully deductable | Want to limit deductions to a maximum of $3,000 |
| Non-concessional contributions cap | The current non-concessional contribution cap is $100,000 when the individuals superannuation balance is less than $1.6 million | Want to lower the non-concessional contributions cap to $75,000 per annum |
| Division 293 threshold | Currently applicable on incomes that exceed $250,000 | Want to reduce the threshold by $50,000 to $200,000 |
| Catch up concessional contributions | An individual can carry forward any unused portion of your concessional contribution cap for up to 5 years if the individuals balance is less than $500,000 | Want to remove this all together |
| SMSF limited recourse borrowing | Borrowing is allowed to acquire assets on a limited recourse basis | Restore prohibition on a prospective basis |
| Deductibility of personal contributions | Personal contributions are deductable | Want to remove and bring back the 10% work test |
| First home super saver scheme | You can use superannuation as a vehicle to save for your first home, up to $15,000 per annum for two years totalling $30,000 plus any associated earnings | Opposed to this scheme |
| Downsizer contribution | Once you have reached age 65, should you sell your home you may be eligible to contribute up to $300,000 each outside of current contribution caps to superannuation | Opposed to this scheme |