Labor’s proposed tax and super changes for the expected May 2019 federal election are many.
Labor’s Proposed Tax and Super Changes
The list is long. There are well over 30 proposed changes just around tax and super.
In today’s episode Gordon Mackenzie of UNSW will focus on three of these changes – franking credit refunds, negative gearing and CGT discounts.
To listen while you drive, walk or work, just access the episode through a podcast app on your mobile phone.
No Refund of Franking Credits
Under Labor shareholders would no longer be able to obtain a tax refund of any excess franking credit. This would take Australia’s dividend imputation system back to its original version under Hawke and Keating, before Costello and Howard introduced cash refunds in 2000.
Recipients of an Australian pension or allowance and any SMSF with at least one such member as of 28 March 2018 as well as charities and not-for profits institutions would be exempt from these changes.
No Negative Gearing of Passive Assets
Investors would only be able to offset investment losses with investment gains or a future capital gain. But there would no longer be an offset with PAYG income, unless the investment is newly constructed housing or grandfathered.
CGT Discount Only 25%
The CGT discount for individuals and trusts would reduce from 50% to 25% for assets held for more than a year. The 33.33% CGT discount for super funds would remain unchanged for now. Small business assets would also be exempt from this change.
These are three of the changes we will cover in this episode. But there is a lot more. Here is a quick list.
a) Reduce Non-Concessional Contribution Cap to $75,000
c) Eliminate Catch-up of Concessional Contributions
d) Revive Work Test for Personal Super Contributions
e) Ban New LRBAs
f) Increase SG to 12% Faster
g) Extend SG to Wages Less Than $450 Per Month
h) ATO to Develop Tax Haven Guidelines for SMSFs
b) Increase Top Marginal Tax Rate to 49%
d) Reduce Tax for Low Income Earners
e) Limit Deduction for Tax Agent Fees to $3,000
f) Start Australian Investment Guarantee (AIG)
a) Protect and Reward Whistleblowers up to $250,000
b) Appoint a Second Commissioner of Taxation
c) Appoint Community Representative to Board of Taxation
d) Disclose Number and Size of Tax Settements
e) Increase Penalties for Promotion of Tax Evasion Schemes
f) Fund Free Tax Clinics
g) Establish a Central Registry of Companies and Trusts
a) Compulsory Disclosure of Residency And Citizenship
b) Deny Tax Deduction for Travel to Tax Havens
c) Tighten Thin Capitalisation Rules
d) Tighten MEC Group Rules
e) Decrease Tax Transparency Threshold to $100m
f) Disclose CbC Reports to Public
g) Disclose Tax Haven Exposure to Shareholders
h) Disclose Country of Tax Domicile in Government Tenders
i) Disclose AUSTRACT Cash Flow Data
j) Increase Compliance Funding
All this is just our brief take on the issue, but please listen to the episode above. Gordon Mackenzie explains all this in a much better way than we ever could.
Disclaimer: Tax Talks does not provide financial or tax advice. This applies to these show notes as well as the actual podcast interview. All information on Tax Talks is provided for entertainment purposes only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 28 January 2020
Tax Talks spoke to Gordon Mackenzie - Senior Lecturer at School of Taxation ＆ Business Law - UNSW Business School - for more details.