What tax changes can we expect following the election?
The election has come and gone, what now?
Following on from our earlier Tax Snapshots (The Dynamic Australian tax landscape and Upcoming election & tax year-end planning), the Coalition has won the 18 May 2019 Federal election and have been returned to Government with a majority (i.e. the Coalition won at least 76 of the 151 seats in the House of Representatives).
This means that:
the Coalition should be able to pass Bills through the House of Representatives , but may have difficulties in passing the Senate; and
the Labor party’s tax proposals (e.g. no cash refunds of excess imputation credits, limit negative gearing, reduce the CGT discount from 50% to 25%, tax discretionary trust distributions at 30% and place a $3,000 deduction cap on the cost of managing tax affairs) will not see the light of day (for at least the next 3 years).
Because of these developments, it’s timely to provide you with a brief outline of what tax changes we can most likely expect from the Coalition Government in the near future.
What tax changes can we most likely expect in the near future?
The main tax changes the Coalition government may consider introducing into Parliament will most likely originate from their previously announced proposals, namely:
tax proposals in the recent Federal Budget;
the backlog of earlier proposals and unenacted Bills that lapsed on 11 April 2019 when the election was called; and
proposals made in the election campaign (i.e. after the 2 April 2019 Federal Budget).
What were the main tax changes proposed in the 2 April 2019 Federal Budget?
The table below provides a succinct summary of some of the main tax changes proposed in the recent Budget.
Note, the changes to the instant asset write-off are already law and are relevant for the 2019 income tax year (see More businesses can now qualify for an increased instant asset write-off). At the time of writing this tax snapshot, it is uncertain whether Parliament will be able to be reconvene to pass the increase to the low and middle-income tax offset before 30 June 2019.
What were the main tax proposals and Bills that lapsed when the election was called?
Set out below is a timeline of some of the main proposals and Bills (and their proposed start dates) that lapsed when the election was called on 11 April 2019.
If the Government chooses to proceed with the proposed changes expressed in the lapsed Bills, these changes will need to be re-introduced in new Bills.
What new tax proposals were made during the election campaign?
On 12 May 2019, as part of the election campaign, the Liberal party proposed a First Home Loan Deposit Scheme that will help eligible first home buyers to purchase a house with a deposit as low as 5% (thereby potentially saving such taxpayers around $10,000 in lenders mortgage insurance). This scheme is proposed to complement the current First Home Super Saver Scheme.
How can Findex help you?
Only time will tell whether the Coalition Government will introduce all their tax ideas into Parliament, and even if introduced, whether they will pass both Houses of Parliament before they can become law.
We trust you found this tax snapshot useful to alert you to some possible tax changes on the horizon.
If anything in this tax snapshot triggered your interest or you are a type of taxpayer that is likely to be affected by these possible changes, please contact your Findex adviser.
We have considerable experience advising on income tax concessions that may be available for your business and look forward to discussing other ways we can help you and/or your business.
Through our Tax Advisory team across Australia, we can help you identify potential opportunities that may be available for your business, while at the same time help you to manage your exposure to business risks.
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