Scott Morrison’s surprise victory was one that the polls, betting markets, and most commentators got wrong. One betting agency paid out bets on Labor ahead of the election.
While the final make-up of the House of Representatives, composition of the Senate, and what that means for passing legislation is unknown, it is worth taking stock of what the election may mean for tax and superannuation.
The following Labor policies will not see the light of day:
increasing the income tax offset for low and middle income earners;
increasing the Budget repair levy;
abolishing negative gearing on investment properties;
reducing the CGT discount to 25% (from 50%);
abolishing refunds of franking credits;
taxing trust distributions at 30%;
capping the cost of managing tax affairs at $3,000;
capping interest deductions for multinationals at the world-wide gearing ratio;
no Second Commissioner for Appeals at the Australian Taxation Office; and
lowering thresholds for tax transparency and introducing added ‘black economy’ measures.
Legislation and reform proposals of the Coalition that lapsed, or effectively lapsed, on calling the election:
the changes to Division 7A;
removing the main resident exemption for foreign residents (including expatriates);
the superannuation guarantee amnesty;
increasing the maximum SMSF members from 4 to 6;
the extension of director’s penalty notices to GST;
the introduction of director identification numbers;
changes to deductions associated with holding vacant land;
the taxation of licensing fame or image rights;
changes to the taxation of testamentary trusts;
research and development reforms; and
personal tax cuts.
We discussed the lapsed Bills in more detail here.
Some Coalition measures will resurface when Parliament next sits. While others – such as the change to the main residence exemption for foreign residents – may quietly slip away. However, the most significant and awaited news for the private group and SME market will be the status of the Division 7A reforms. We wait and see.
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