WLF Tax Proposals Client Update – the 2018-19 Federal Election
Whilst for many people tax policy is as boring as watching paint dry, there are some important proposed changes to the tax system that will affect many of our clients. WLF Business & Personal Advisory Partner, Paul Lyons has summarised the key proposals below:
|Area||The Coalition proposals||Labor proposals|
|Corporate tax rates||A reduced corporate tax rate for all companies eventually with a target rate of 25%.||Restoring the company tax rate to the full 30%, along with a possible lower rate for smaller corporate entities.|
|Personal tax rates||A likely reduction in personal tax rates particularly for income levels up to $100,000 – the exact details are unknown but should become clearer after the May 8 budget.||Higher personal tax rate rates at the top end, up to 49.5%, and lower personal tax rates at the lower end.|
|Medicare levy||Increase to the Medicare levy to 2.5% (as previously announced)||An increase in the Medicare levy to 2.5% coupled with a more generous Medicare levy arrangement for lower paid workers than is currently available.|
|Negative gearing||No change to current arrangements regarding negative gearing of investment properties.||A ban on negatively geared investment properties, other than newly built investment properties and properties purchased before implementation of the ban.|
|Capital gains tax (CGT)||No change to the general CGT discount which currently sits at 50% for individuals.||A halving of the general CGT discount to 25% for individuals.|
|Discretionary Trusts||No change to the current arrangements regarding trust distributions from discretionary trusts.||A minimum tax of 30% on all distributions from discretionary trusts excluding primary production, charities or deceased estates.|
|Franking credits||No change to the current arrangements regarding franking. In particular, full refund of excess imputation credits.||A denial of any refund of excess franking credits.|
|Depreciation for small business||No changes in relation to depreciation. The $20,000 immediate asset write-off available to 30 June 2018 is not currently being extended by the Coalition. That may change in the May 8 budget.||A new deduction (the Australian Investment Guarantee) which will enable a 20% deduction in respect of the purchase of any new eligible asset worth more than $20,000.|
There are clearly some major variances between both party’s proposals and the devil is always in the detail. We expect to see plenty of more proposals from both sides in the lead up to the Federal election which is still some time away. So hold on as it will be an interesting ride!
As always if you have any queries regarding the impact on your personal circumstances please keep in touch.