In our latest newsletter, we provided a comprehensive analysis of the tax and superannuation policies of the Coalition and ALP. Now that the election has concluded, we want to present a brief overview highlighting the tax implications of the Coalition’s victory. As prominent accountants in Sydney, we understand the significance of these developments and aim to keep you well-informed.
Low and Middle Income Tax Offset (LaMITO)
The LaMITO was proposed to increase from 1 July 2018 as follows:
| Taxable Income | Current LaMITO | Proposed LaMITO |
| Up to $37,000 | $200 | $255 |
| $37,001 to $48,000 | $200 plus 3c for every dollar above $37,000 | $255 plus 7.5c for every dollar above $37,000 |
| $48,001 to $90,000 | $530 | $1,080 |
| $90,001 to $125,333 | $530 minus 1.5c for every dollar above $90,000 | $1,080 minus 3c for every dollar above $90,000 |
| $125,334 and above | Nil | The top threshold increased to $126,000 before it cut out |
This would effectively increase the tax-free threshold for those under 65 to $21,884. For those over 65, the effective tax-free threshold will be $33,621 for single people and $29,783 each for married people.
The government has legislated this change, and the payments will be received in the 2019 assessments. This has led to an 80% increase in the number of returns already lodged at this time of year compared to last year.
Changes to Thresholds and Rates
The Coalition proposed increases in tax thresholds and cuts to tax rates, some of which will start from 1 July 2022. Ultimately, by 2024/25, they propose that the top marginal rate of 45% will only apply to those earning over $200,000, and for the bracket earning between $45,000 and $200,000, a tax rate of 30% will apply. While holding a majority in the House of Representatives, they must negotiate with the crossbench to pass this proposal through the Senate.
Instant Asset Write-off threshold
The proposal to increase the threshold for instant asset write-off from $25,000 to $30,000 and extend it to businesses with a turnover of up to $50 million (previously only applied to businesses with a turnover of up to $10 million) was passed into law before the election and applied for assets acquired from 2 April 2019 until 30 June 2020.
Luxury Car Tax Refunds for Primary Producers and Tourism Operators
For vehicles purchased from 1 July 2019, the Coalition proposes that eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid up to a maximum of $10,000 (up from the current amount of $3,000).
Removal of the work test and extension of the Bring-forward cap for some taxpayers
From 1 July 2020, the Coalition propose that people aged 65 and 66 will not need to satisfy a work test to be able to make superannuation contributions. Under current rules, they can only contribute if they work at least 40 hours over a 30-day period. Those aged 67 to 74 would still be subject to the current rules.
From the same date, those people can make up to three years’ worth of non-concessional contributions. By doing this, they can contribute up to $300,000 in non-concessional contributions in a year.
Increase in age limit for spouse contributions
From 1 July 2020, the Coalition proposes increasing the age limit for spouse superannuation contributions from 69 to 75 years. The contributing spouse can claim a spouse tax offset of up to $540.
Simplifying Superannuation Fund Reporting
From 1 July 2020, the Coalition propose that superannuation funds will be able to choose their preferred method for calculating exempt current pension income (i.e. the component of income of the Fund that is not subject to tax). The requirement for a superannuation fund that is 100% in pension mode to obtain an actuarial certificate will also be removed.
First Home Buyers Guarantee
As part of their campaign launch a week before the election, the coalition committed to introducing a scheme to guarantee the difference between a 5% deposit and the 20% that would otherwise be required to avoid mortgage insurance. The scheme is proposed to apply to single first-home buyers with incomes up to $125,000 or couples with incomes up to $200,000.
Key Proposals You Don’t Have to Worry About
With the ALP failing to win government, their key policies will not be implemented. These included:
- Denial of imputation credit refunds;
- Reduction in the CGT discount from 50% to 25%;
- 30% minimum tax rate for distributions to adult beneficiaries;
- Removal of negative gearing.
Kreston Stanley Williamson
*Correct as of July 2019
Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.
