Now the tax battle begins
TAX was left alone in last week’s financial services royal commission final report, but future changes loom large in the minds of millions of Australians.
The upcoming federal election has already become a tax battleground, with Labor’s plans to scrap excess franking credit cash refunds for hundreds of thousands of selffunded retirees sparking the most anger in recent weeks.
It also wants to stop negative gearing tax deductions for all but new properties, and reduce the capital gains tax discounts for future investments.
H & R Block director of tax communications Mark Chapman said the Federal Government fired fresh shots last month when it announced it would increase the instant asset write-off for small business owners, from $20,000 to $25,000.
This allows them to instantly claim full tax deductions for any business items costing less than $25,000 and would benefit more than two million small business owners, he said.
“No doubt we will get a lot more of that as we head closer to the election,” he said.
Mr Chapman said taxpayers should keep an eye on the tax debate and try to work out whether they would be winners or losers.
“As it’s an election year, there will be some pretty significant tax announcements but I expect most will be good news rather than bad news,” he said.
Labor’s controversial tax policies were announced well in advance, some of them years ago, Mr Chapman said. “That gives them space before the election to announce more good news,” he said.
Chartered Accountants Australia and New Zealand tax leader Michael Croker said taxpayers should not wait until tax time to start thinking about their tax return.
“Think about the tax policies of the major parties and the impact on your finances,” he said.
The Government axed property investors’ tax deductions for travel and some depreciation deductions, and landlords only felt the changes in last year’s tax returns.
“Don’t make financial decisions based solely on potential tax breaks,” Mr Croker said. “If you’re spending cash just to get a tax break, you may end up worse off.”
‘As it’s an election year there will be some pretty significant tax announcements’ H & R Block’s Mark Chapman