In the lead up to the 2016 Federal Budget I find it disconcerting that both sides of politics are rumbling about significant tax changes to our federal system in an attempt to raise revenue and alleviate the budget blow out.
It’s not the fact that they are singing a similar tune for once that worries me. It is the fact that they appear to be uniform in making some pretty substantial changes that affects the status quo of our tax system.
Tax Changes
The word is that the following tax changes are being looked at:
| Government | Opposition | |
| Superannuation | · Reduce the contributions cap to $20,000 pa – Currently $30,000 or $35,000 for over 50’s. · Reduce the non-concessional cap from $180,000. · Reduce the CGT discount from 50% to 33%.
| · Introduce tax on pensions paid from a super fund which are over an annual threshold, say $75,000. · Reduce the High Income Threshold to $250,000, from the current $300,000 pa. |
| Negative Gearing | Consideration is being given to limiting the amount claimed each year to say $50,000 or limiting the number of properties that one may claim negative gearing relief on each year.
| Negative gearing will only be allowed on new properties. Previously owned properties will not be eligible. The condition will be grandfathered. |
| Capital Gains Tax | No changes | The CGT discount will be reduced to 25% which is a reduction from the current 50% where applicable. |
These changes have a significant effect on long term strategies employed by various taxpayers. In addition to pushing up compliance costs, it may have other profound effects on the market.
I will be looking at the impact on these changes in my next post. In the meantime, I would love to get your feedback and thoughts on these proposed changes. Click on the link to complete a short survey and go into a draw to win a bottle of wine – on us!
