With the federal election around the corner, here is a list of what Labor are proposing in regards to accounting and tax .
Their new propositions and forecast are predicting (if they win) to be the highest taxing Australian Government in history.
In our previous article, the government announced completely abolishing the 37% tax bracket. This means that those who earn more than $90,000 in taxable income won’t be taxed at a higher rate and instead will be taxed at the lower tax rate of 32.5%. Taxpayers benefit when earning higher income as they can be taxed less on the increased money they make. Labor has pledged to repeal this decision if they win in the federal election.
Labor have also proposed to eliminate negative gearing from taxpayers. This means that those who have investment properties and are making losses from them cannot use these losses to reduce their overall taxable income. This can have major detrimental effects to taxpayers as their ability to receive some tax relief in a higher refund to pay for their properties which make losses is abolished.
CAPITAL GAINS TAX
When you sell an asset such as a house or shares the profit is taxed in the form of capital gains. If you hold the asset for longer than 12 months, you’re eligible for a 50% discount on the profit you make. Labor have proposed to reduce the discount to 25%. The burden to pay higher taxes again falls on the taxpayers.
FAMILY TRUST DISTRIBUTION
Labor have proposed for a number of years to tax all family trust distributions at a flat tax rate of 30%. This will make most family trust structures where business and houses are based in unsuitable for future use. Again, burdening taxpayers with higher taxes.
Labor have proposed a cap on deductible accounting fees at $3,000. Although many taxpayers aren’t incurring these types of fees, the ones who will lose out the most are those who need accountants to help close or open up businesses, help settle financial situations during cases of divorce/separation, selling of property or major business changes. Labor don’t believe that it’s fair taxpayers can claim so much when accountants are the ones helping taxpayers understand how they can get the best out of their financial situation.
Labor desires to tax more of our money because they believe they can spend it better than we can in the benefit of the community. Time and time again we have seen the government’s inability to manage their financial situation causing our major cash deficits and international debts. What are your thoughts?
Steven Wong Accountants
Accounting for Growth