With the Liberal National Coalition having secured another term of power in Canberra, we now have a clearer view of what we can expect in terms of key policies on tax and superannuation moving forward. Here’s a breakdown of what the Coalition has promised. Do not make any changes to your super or investment strategy without consulting your financial advisor first.
The Coalition has pledged a $158bn 10-year income tax cut package consisting of:
- Doubling the low and middle-income tax offset to benefit 10m taxpayers.
- Raising the threshold for the 19% tax rate from $41,000 to $45,000 in July 2022.
- Flattening tax brackets so those earning between $40,000 – $200,000 pay a marginal rate of 30% from 2024.
- No changes to negative gearing or Capital Gains Tax (CGT).
- Maintain cash payments to self-funded retirees as a rebate for franking credits.
Negative Gearing and CGT
One of the big differences between the two major parties pre-election is that the Coalition has promised that there will be no changes to the current policies on negative gearing and the CGT, a fact that will please many property investors.
Then-treasurer, now Prime Minister, Scott Morrison announced several new super proposals in the 2017 Budget. The majority of them commenced from the start of the 2017-18 financial year. Among them:
A $1.6 million transfer balance cap placed on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase. Subsequent earnings on balances in the retirement phase not be capped or restricted. Savings beyond this can remain in an accumulation account (where earnings are taxed at 15 per cent) or outside the superannuation system. This cap is about twice the level of assets at which a single homeowner currently loses entitlement to the Age Pension. It is indexed and will grow in line with CPI, meaning the cap will be around $1.7 million in 2020-21. The Government says less than 1 per cent of Australia's superannuation account holders will be affected by the transfer balance cap.
We’re always happy to advise our clients how policy changes may affect them and what strategy we advise. Call us anytime on(02) 8268 2900if you’d like to discuss any of the above further.