Budgets released in the year of a federal election are always highly contentious. This year is proving to be no different, with a stark contrast in the policies released to date by the Coalition and the ALP.

Some of the major income tax reforms released to date include the following:

Personal tax deductions

• ALP – Deductions for personal tax-related expenses will be limited to $3,000.
• Coalition – No cap on tax-related expenses. Tax payers now required to provide additional information on their personal tax returns regarding claims for managing tax affairs.

Reduction in capital gains discount

• ALP – The general discount for capital gain made on the sale of assets to be reduced from 50% to 25%.
• Coalition – Have not indicated they wish to change the capital gains discount from 50% if re-elected.

Limiting negative gearing

• ALP – From January 1^st 2020, negative gearing regime will only apply to new houses. Properties that are currently negatively geared will remain that way.
• Coalition – Have not indicated they wish to change the negative gearing laws if re-elected.

Cash refund of franking credits

• ALP – Proposes to remove taxpayers’ ability to receive a cash refund of franking credits from shares owned in companies.
• Coalition – Have not indicated they wish to change the excess imputation credit laws if re-elected.

Tax on discretionary trust

• ALP – For tax payers who operate using a discretionary trust structure, it is proposed that a flat tax rate of 30% will apply to all distributions to beneficiaries over the age of 18.
• Coalition – Have not indicated they wish to change the taxation laws in regards to discretionary trusts if re-elected.

Immediate depreciation deduction for eligible assets

• ALP – Proposing an immediate depreciation deduction of 20% for all eligible assets purchased.
• Coalition – On January 29^th 2019, the Coalition announced the instant depreciation deduction threshold for small business entities would be increased from $20,000 to $25,000 until June 30th 2020.

Increase super guarantee rate in shorter time frame

• ALP –  Proposing to lift the rate from 9.5% to 12% in a quicker time frame than the Coalition, although the exact time frame has not been provided to date.
• Coalition – Has a state policy to increase the super guarantee rate from 9.5% to 12% by 2026.

TJL will be providing further updates after the release of the Budget on April 2^nd and the Opposition’s Budget reply on April 4^th. If you have any questions or concerns regarding the potential impact of the proposed changes, please contact TJL in Forster on (02) 6554 9511 or Taree on (02) 6552 3233 to have a discussion with one of our qualified Accountants or Financial Planners.