2019 Federal budget in reply

04 April 2019

In response to the Opposition budget reply speech presented this evening, BDO tax partner, Mark Molesworth provided the following comments:

“Mr Shorten has confirmed that the Labor party intends to fund many of its promises, including its Medicare Cancer Plan, by removing most refunds of franking credits, introducing restrictions on negative gearing and reductions in the CGT discount. All of these measures will influence investment decisions. However, we would counsel against making rash decisions until more of the implementation detail of the policies is released.”

“In our view, the Labor leader’s commitment to tax reform should be encouraged and applauded. We would urge Labor to commit to holistic, system wide reform considering all taxes, particularly those dead-weight taxes that are a drag on business. In our view tax reform is about more than one-out measures such as negative gearing, CGT discount and franking credit changes.”

“The immediate deduction for the first 20% of all plant and equipment acquisitions over $20,000 will be welcomed by capital asset intensive industries. If the Labor Party is committed to new clean-tech manufacturing industries, further incentives are likely to be required. We call on Labor to outline how it will improve the R&D tax incentive.”

“Labor’s plan to increase wages will also have a flow on effect to government tax revenue. In general, individuals will pay more tax on those wages than companies do on their profits.”