COMPARING KEY LIBERAL AND LABOR TAX/SUPER POLICIES AS AT 28/2/2019

FEDERAL INCOME TAX REFORMS

ALP POLICIES

COALITION POLICIES

Cap individual deductions on personal tax-related expenses to $3,000 per year.

No proposed cap on personal tax-related expenses.

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)

• assets of small business owners

No indication the Coalition intends to change the current maximum general CGT discount from 50% for eligible taxpayers.

Limit negative gearing to investments in new housing, with grandfathering for pre-existing investments. Any losses from new investments in shares and existing properties (which we assume includes commercial property) may still 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.

No change to current negative gearing rules is indicated.

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

No indication that the Coalition intends to change the current ability for eligible taxpayers, including individuals and SMSFs, to receive cash refunds for excess imputation credits.

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).

No indication that the Coalition intends to change the current rules in relation to the taxation of discretionary trust beneficiaries at their applicable marginal tax rate.

Introduction of an Australian Investment Guarantee from 1 July 2020. Businesses can ‘immediately expense’ 20 percent of the value of eligible new assets in the first year, with the balance depreciated in line with normal depreciation schedules from the first year.

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).

FEDERAL SUPERANNUATION REFORMS

ALP POLICIES

COALITION POLICIES

Lower the non-concessional contributions (NCCs) cap to $75,000 (down from the current $100,000).

The Coalition has not indicated that it will change the current $100,000 NCCs cap (indexed).

Lower 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.

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

Retain the new CCs five-year catch-up rules for eligible members if they have a total superannuation balance of less than $500,000.

Repeal 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).

Prospectively restore the prohibition on direct borrowing by SMSFs on housing investments via Limited Recourse Borrowing Arrangements (LRBAs).

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

End the freezing of the Superannuation Guarantee rate at 9.5% and fast-track the employer compulsory contribution percentage to 12%. 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.