After what many would describe as another cringe-worthy election campaign, we have a winner. If you were to believe the polls (the coalition trailed behind Labor for over two years) and much of the media coverage, it came as a surprise that ScoMo and the Libs will be in power for the next three years.
When it comes down to it, the coalition actually made very few election promises. Their campaign was less about policy and more about defending their position. The promises they did make, however, were very much focussed on the economy. So what does this election result mean for you and your business?
- The tax offset promise made pre-election victory is looking a bit shaky at this point in time, simply because of the timeline. ScoMo is pushing for $1080 to go into the pockets of those earning up to $126,000 this tax time even if it means the ATO will do automatic amendments for those who lodge early.
- Stage two and three of the coalitions tax reforms may go ahead (stage one happened last year). Stage two means that as of July 1, 2022 the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000.
- If stage three – flattening of the tax brackets – goes ahead in 2024 (this is Australian politics… who knows what could happen before then…), it will mean those earning between 41-200k will all pay a tax rate of 30%. In real terms, it means you’ll save -$1,205 if you earn $50,000, $1,955 if you earn $80,000, $3,040 it you earn $100,000 and $11,640 if you earn $200,000 or more.
- Negative gearing will remain unchanged, which means investing in property is still a very attractive option for those wanting to grow their wealth.
- Capital gains tax and franking credit policies also remain unchanged which is good news for those wanting to sell assets, or with money in the share market as cash re-funds will remain.
- Discretionary trusts will not be taxed which means business owners can continue structuring their finances and minimising tax using this strategy with no new repercussions.
At this point, we don’t have much more for you! We’ll revisit the coalitions changes (or lack thereof) in a couple of months and fill you in on the key areas. Until then, if you have any questions, as always feel free to get in touch.