• Opposition reply - Federal Budget 2019

Opposition reply

With a clear message of ‘Flying the Australian Ensign’, Bill Shorten’s response speech was as focused on the upcoming election as was the Government’s ‘welcome aboard’ budget.

Labor’s ‘made in Australia’ vision comes with a welcomed commitment to tax reform and although the details of that reform remain unclear, BDO welcomes any activity that promotes real reform for Australia.

The Labor revenue raising tax changes, which will provide lower rates for low income earners, the same for middle income earners, and higher rates for high income earners, in conjunction with the focus on wages growth, will likely be a life jacket for some, but may see others scrambling for the life boats. However you choose to see them, these policies will be a major issue for voters at the upcoming election.

Both the Government and the Opposition now have a range of tax policies in their respective armoury which will, no doubt, be used to fire at each other in the lead up to the election. Whichever party wins in May, the new government will have to introduce their policies to the Australian public in a climate of increasing (tax scale) bracket creep, cooling down of the housing market, and a fragile global economy.

As the Labor Party prepares to set sail into the stormy waters of the next Federal Election, the question remains whether they have promised too much and are sailing too close to the wind, or if the view from their telescope for an optimistic future based on real tax reform will chart a new course for Australia. Overall it seems it is a ‘sink or swim’ scenario for both sides of politics.

► Individuals

  • Personal tax cuts
  • Top marginal tax rate
  • Cap on deductions for tax management expenses
  • Excess dividend imputation credits

► Dividend imputation

  • Excess dividend imputation credits

► Trusts

  • 30% minimum tax rate on discretionary trust distributions
  • Beneficial ownership tracing central registry

► Affordable Housing

  • Negative gearing limited to new housing
  • Capital gains discount halved
  • Foreign investment in residential property

► Foreign tax measures

  • Disclosure of residency to ATO
  • Thin capitalisation amendments
  • Public Country-by-Country reporting

► Tax evasion

  • Abolition of deductions for travel to and from tax havens
  • Denial of bad debt deductions
  • Increased penalties for promoting tax evasion

► Disclosure measures

  • Disclosure of tax havens to shareholders
  • New Tax Transparency Code
  • ATO annual reporting of company data

► Tax reform

  • New Australian Investment Guarantee / Instant Asset Write Off
  • Company Tax Rate
  • Another ATO Second Commissioner
  • 10 free tax clinics
  • Whistle-blower protections

► Superannuation

  • Non-concessional cap reduced to $75,000
  • High income superannuation contribution threshold
  • Abolition of catch-up concessional contributions
  • Superannuation guarantee
  • Borrowing by SMSFs prohibited

► R&D

  • R&D Tax Incentive unchanged