Prime Minister Scott Morrison has indicated that an election will be held in the first half of this year, and the tax policies of both the Coalition and Labor are emerging as a key battleground.
In this article, we’ll look at some the key tax policies being proposed by the government if they’re re-elected.
Marginal tax rates
The Coalition announced progressive changes to Australia’s marginal tax rates in the 2018 Federal Budget. It has increased the top threshold in the 32.5% marginal tax bracket from $87,000 to $90,000 for the 2018/19 financial year. The Coalition also plans to:
increase the top threshold of the 19% tax bracket from $37,000 to $41,000 for the 2021/22 financial year and beyond, as well as increasing the maximum low-income tax offset from $445 to $645.
increase the top threshold of the 32.5% tax bracket from $120,000 to $200,000 for the 2024/25 tax year and beyond.
remove the 37% tax bracket for the 2024/25 year and beyond.
The government also announced a low-and-middle income tax offset of up to $530 that will be available for eligible taxpayers for the next four years, starting from the 2018/19 financial year. This offset will be in addition to the low-income tax offset that was explained above.
Taxpayers that earn between $48,000 and $90,000 will be eligible for the full $530 offset.
Taxpayers that earn less than $48,000 or between $90,000 and $125,333 will be eligible for a partial offset.
No low-and-middle income offset is available for taxpayers earning more than $125,333.
Negative gearing, capital gains tax and dividend imputation
Labor has proposed some significant changes to Australia’s current negative gearing, capital gains tax and dividend imputation systems if they are elected. You can read about those policies here.
The Coalition opposes all of these changes. They argue that Labor’s proposals for negative gearing and capital gains tax will disadvantage existing property owners.
How we can help
There’s an old saying that ‘the only certainties in life are death and taxes’. Regardless of who wins the next election, it makes sense to structure your investments tax-effectively.
At Create and Protect Financial Planning, we can help you to do that. We’ll take the time to understand your needs and goals so that we can provide you with the best possible advice.
Call 1300 707 955 or email email@example.com to get started!