Considered Value – ALP Tax Policies (Special Edition)

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 ExpensesRestrict 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 GearingLimit 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 CreditsRemove 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 TrustApply 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 GuaranteeIntroduction 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 $200,000Lower 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 ContributionsRepeal 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 ContributionRepeal 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 BorrowingProspectively 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

This material is for guidance only, any professional advice should be obtained before acting on any information contained herein. Neither the publisher nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this newsletter. We recommend that you contact your Harris Black team member before making any decision to discuss your particular requirements or circumstances.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

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