Money minds turn to tax cuts

THE Morrison Government’s surprise election victory sparked a sigh of relief last week from investors and self-funded retirees, and public attention now turns to tax cuts.

In just over a month, more than 10 million workers will be eligible to receive up to $1080 of tax cuts when they file their annual tax return.

It’s the first stage of the Morrison Government’s massive income tax reduction program, and there have been calls for it to bring forward future stages by several years.

Labor’s election policies to change capital gains tax, negative gearing and franking credit refunds are now a memory. However, it and minor parties can still block future tax announcements in the Senate.

In the meantime, the only tax news is good news. H & R Block director of tax communications Mark Chapman said the only significant tax-related election proposal remaining was tax cuts.

“All those things Labor was proposing are off the table now,” he said. “Everything stays as it was and, for the segment of people who were going to lose their franking credits, there’s a lot of relief. As we head toward the end of financial year, people need to get ready to lodge their tax return, get receipts together, talk to their accountant and get ready for July 1.”

BetaShares chief economist David Bassanese said this year’s tax cuts alone were unlikely to be enough to spur a sluggish economy, the next round of planned tax cuts in three years was “too long to wait”, and they should be brought forward.

The Coalition’s long-term tax plan removes the 37 per cent tax bracket and all taxpayers earning between $45,000 and $200,000 will be on the 30 per cent tax rate. Stage two – in July 2022 – lifts the top threshold of the 32.5 per cent bracket from $90,000 to $120,000, while the final stage, in 2024, delivers higher income earners thousands of dollars each year.