Australian’s will go to the poles on Saturday 18th May and there are some important things that you need to know which may impact on your financial affairs.
Do you know what Bill Shorten’s Labor is proposing?
If Labor win’s the upcoming federal election they have some changes in legislation that may hit you hard in the hip pocket.
- Franking Credit Changes – Retiree’s Tax
- Negative Gearing Changes
- Tax Changes to Trust Distributions
- Superannuation Changes
Franking Credit Changes
Have you heard about the proposed “Retiree’s Tax”. What it means to many of you not just retirees is that your franking credits – the tax that you have already paid as a shareholder in the company where you own shares, will be taxed again.
Retirees are estimating they will lose 20 – 30% of their income if this policy goes through.
One man, via video, said he would lose 20 per cent of his income as a result of Labor’s plan to end cash refunds on franking credits.” According to ABC News
Negative Gearing Changes
Labour is proposing to stop negative gearing – this will probably have an adverse effect forcing up rents that are charged and the cost of buying properties.
According to the Labor Party
“Australia currently has the most generous property tax concessions in the world.
Current arrangements for negative gearing and capital gains tax concessions predominantly benefit high-income earners. 70 per cent of the benefits of the CGT discount and 50 per cent of the benefits of negative gearing go to the top 10 per cent of income earners”
The negative gearing changes not only apply to property, but shares and business purchases and you will no longer be able to deduct excess interest when purchasing these assets either if this change is implemented.
Tax Changes to Trust Distributions
If elected Labor proposes to change the tax rate on discretionary trust distributions to a standard minimum of 30%. If you are currently using your trust to reduce the amount of tax pay to protect your asset or for a business succession strategy this will no longer be available and you will have to pay a minimum of 30% tax. These tax changes could also affect any adult children who are in tertiary education and receiving an income from the trust.
Superannuation Changes
Labor has also said that they will increase compulsory super contributions from 9.5% to 12% which will impact all small businesses. Other changes include reduction of concessional contributions into superannuation and taxing of pensions over $75,000.
Please read Labor’s policy document for full details.
Do your homework and make an informed choice when you vote in the upcoming election.
If you are unsure how any of these changes may affect you please ring HBG Tax and Accounting on 08 9594 1963.
